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Even those of modest means can afford a financial planner

By Steve DinnenCorrespondent of The Christian Science Monitor / April 17, 2006



It takes money to make money, at least with financial planners - many of whom like their clients to have net assets of $500,000 or even $1 million or more.

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Christina Rohall fell far short of either mark. Still, when she landed a position in San Francisco that paid 60 percent more than her first postcollege job, she wanted advice on handling her money. Lo and behold, she discovered a secret: Some planners will work with clients who don't have gobs of cash.

"I'm sure they were hoping to land a bigger fish," says Ms. Rohall, who handles marketing and publicity for software companies. Still, the planner who drew her business card from a bowl at a restaurant took her on and produced a plan that six years later is still helping to guide her financial life.

Financial planners help people build wealth and guide them toward financial milestones such as retirement, vacation homes, or funding children's educations. But they don't work free of charge. Some, like the one who worked with Rohall, charge an hourly rate for their advice. Many more charge a commission on the products they sell, so they want clients with assets to invest in order to generate fees.

If you're a commission-based planner, then, would you rather work with someone who has $50,000 to invest, or $500,000? The obvious answer explains why planners shy away from people with thin bank accounts.

It's a problem for both planners as well as clients. "The economic reality is that people who provide the advice need to get paid for it," says Dan Moisand, president of the Denver-based Financial Planning Association (FPA).

Even so, the position of his 28,000-member trade group, which hands out the certified financial planner (CFP) designation, is that everyone should have access to competent financial planning. The FPA has fostered pro bono work for people of lesser means in the wake of hurricane Katrina and for military personnel, Mr. Moisand says.

FPA is also looking at urban areas where they might set up storefronts where members could place younger, less-experienced planners to work with younger, less-wealthy clients.

To get that job done, planners could copy the blueprint developed in Little Rock, Ark., at the Financial Decisions Institute.

There, certified financial planner Rick Adkins says that he used to worry that turning away someone as a client might drive them to someone who would not do a professional job. (There is no governmental licensing of financial planners, and con men lurk in the industry.) So he and three competitors in Little Rock got together six years ago and formed the institute, which takes on people who don't have $1 million, or even $100,000.

"It's allowed us to serve a segment of the community that wasn't going to get advice," says Mr. Adkins. The institute charges customers an hourly fee, so planners don't have to sell clients a financial product in order to generate commission. Planners typically will be younger men or women who work under the supervision of Adkins and his partners. He has used some technological innovations to drive down costs.

By now, Adkins says that the institute has about 300 clients, with $15 million in assets. That's about $50,000 per client.

Adkins says his concept could work elsewhere; he has spoken with planners in Texas and elsewhere about copying it. But it could be a long time before every city has such a storefront, so most people in search of a planner must devise their own way to get their foot in the door.

An easy way is through family ties, such as a parent who already has a relationship with an advisory firm. If they're working on Dad's account, they might figure it's worthwhile to work on Junior's, too, if for no other reason than to keep Dad happy.

No rich relatives? Well, how about a job with a good earnings potential?

Cheryl Burbano, a certified financial planner in Tampa, Fla., says her clients typically have $100,000 to invest. But she also will occasionally take on people who have a negative net worth, such as newly minted physicians who carry hefty student loans. "You just have to build that [debt] into their plan," says Ms. Burbano. "Hopefully they'll get into a positive net worth."

A positive attitude helps, too.

Brian Jones, a planner in Fairfax, Va., says that he sizes up clients to see whether they're a good match for one another.

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