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Fee-Only vs Comprehensive Retirement Planning in Kansas City
One term describes how an advisor is paid. The other describes what the advisor does. Confusing them is the most common mistake pre-retirees make when comparing firms.
Fee-only describes where an advisor's compensation comes from. Comprehensive describes how wide the planning scope is. They are separate questions, and an advisor can rate differently on each.
Two words that are not opposites
If you are three years from retiring in the Kansas City area and comparing firms, you have probably seen both terms used as though they were competing options. They are not. They answer different questions.
Fee-only means the advisor is compensated exclusively by fees you pay. No commissions on insurance products, annuities or securities transactions, and no referral payments from product companies.
Comprehensive describes scope. A comprehensive planning relationship covers investments, tax coordination, Social Security timing, health care and Medicare, cash flow, and estate coordination as one connected process rather than as separate engagements.
An advisor can be fee-only and narrow. An advisor can be comprehensive and fee-based. Sorting the two apart is the first useful thing you can do when comparing firms, because a brochure will often lead with whichever one sounds better.
How advisors get paid
Three broad compensation models exist. Each has a structure worth understanding, and none of them is disqualifying on its own.
| Model | Source of compensation | What to confirm |
|---|---|---|
| Fee-only | Client-paid fees only. May be billed as a percentage of assets, a flat annual fee, an hourly rate, or a one-time planning fee | Total annual cost expressed in dollars, not only as a percentage |
| Fee-based | Client-paid advisory fees, plus commissions where insurance or brokerage transactions are involved | Which part of the relationship is advisory and which is brokerage, and how each is compensated |
| Commission | Product commissions only | What alternatives were considered and what each would have paid |
CFG Wealth Management is fee-based. Securities and advisory services are offered through Madison Avenue Securities, LLC, member FINRA and SIPC, and a registered investment advisor. Advisory accounts are compensated by client-paid fees. Insurance and brokerage transactions may pay a commission. We will state in writing which capacity applies to any recommendation, and you should ask that of any firm you consider.
Whichever model a firm uses, the question that matters is whether you can get the number in dollars. A percentage is easy to quote and hard to feel. Ask what the arrangement costs in a typical year, in dollars, including anything charged at the product level.
Standards of care, service by service
The word fiduciary gets used loosely, and the honest answer is that the standard depends on which service is being delivered.
Investment advisory services carry a fiduciary duty, an obligation to place the client's interests first, described in the firm's Form ADV. Brokerage recommendations are governed by Regulation Best Interest, in effect since June 2020, which requires acting in the retail customer's best interest at the time of a recommendation and disclosing conflicts. Insurance transactions are governed by state insurance regulation and applicable suitability or best interest rules.
A firm that does more than one of these things operates under more than one standard. That is a fact about how the industry is structured, not a judgment about any particular firm. What you are entitled to is a clear answer about which standard applies to the specific recommendation in front of you, and a written disclosure of how the person is paid for it.
Two documents make this checkable. Form ADV describes an advisory firm's services, fees and conflicts. Form CRS is a short relationship summary written for clients. Ask for both.
Why scope matters more at three years out
During your working years, an investment-only relationship can be perfectly adequate. Contributions go in, the allocation gets reviewed, and the plan is largely one of accumulation.
The three years before retirement are different, because several decisions land at once and they interact. Which accounts you draw from first affects your taxable income. Taxable income affects how much of your Social Security is taxed and which Medicare premium tier you land in two years later. When you claim Social Security affects how much you need to withdraw in the meantime. A Roth conversion done without looking at the Medicare thresholds can produce a surprise well after the fact.
None of those are investment selection questions. If the scope of the relationship stops at the portfolio, those questions do not get answered by anyone.
What belongs in the plan now
Withdrawal sequencing
The order in which you draw from taxable, tax-deferred and tax-free accounts changes how much of each dollar you keep. Our tax-efficient retirement planning work covers Roth conversion analysis, required minimum distributions, and withdrawal order, coordinated with your CPA rather than in place of them.
Social Security timing
Claiming earlier means income sooner at a permanently lower monthly benefit. Delaying past full retirement age earns delayed credits. Spousal and survivor consequences change the calculation for married couples, sometimes substantially. Our Social Security planning works through the reasoning before the date.
Medicare and IRMAA
Medicare enrollment periods are date-driven, and premium surcharges are based on income reported two years earlier. Conversions and large withdrawals in the years before enrollment can raise those surcharges. Coordinating the two is a scheduling problem as much as a tax one.
Portfolio positioning
Sequence-of-returns risk describes the effect of poor early returns on a portfolio being drawn down. Adjusting allocation and holding a cash reserve are common responses. Neither eliminates the risk, and no allocation can guarantee a result.
Estate coordination
Beneficiary designations override wills. Account titling determines what passes and how. Our estate and legacy planning work reviews both alongside your attorney's documents.
Questions to ask at a first meeting
- How are you compensated, and what will this cost me in dollars in a typical year
- Which parts of what you do are advisory, and which are brokerage or insurance
- What is included beyond investment management
- May I see your Form ADV and Form CRS
- Who will I actually meet with at reviews
- How do you coordinate with my CPA and attorney
Two free public resources let you verify what you are told. FINRA BrokerCheck covers brokers and their firms. The SEC's Investment Adviser Public Disclosure site covers advisory firms and their representatives. Both are worth five minutes before a first meeting.
Signs worth a second look
- Vague or shifting answers about how compensation works
- Reluctance to provide Form ADV or Form CRS
- A product recommended before anyone has asked what you are trying to accomplish
- A scope that stops at investment selection when your questions are about income, taxes and timing
How we do it
Every relationship at CFG Wealth Management begins with a Purpose Conversation. Nothing is recommended in that meeting. It exists so that when we do get to numbers, we already know what the money is for.
LaMont Chandler is personally involved from that first meeting through every annual review. He holds FINRA Series 7, 24 and NASAA Series 63, 65 registrations, CRD 2794744, and has been registered in the securities industry since 1996.
Common questions
What is the difference between fee-only and fee-based?
Does fee-only mean the same thing as fiduciary?
What should comprehensive planning include for someone three years from retiring?
How do I compare advisor costs fairly?
Where can I verify an advisor's registration?
Where this connects
- Retirement income planning is where withdrawal sequencing actually gets built
- Tax-efficient retirement planning covers Roth conversions and required minimum distributions
- All CFG Wealth Management services
- More retirement planning insights
— Start here —
Ask us the same questions you would ask anyone.
There is no cost and no obligation for a first conversation, and nothing is recommended in it.
This article is general information and is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. Neither the firm nor its agents or representatives may give tax or legal advice. Consult a qualified professional regarding your circumstances.
Descriptions of compensation models and standards of care are general and are not statements about any particular firm other than CFG Wealth Management. Fee arrangements, regulatory standards and disclosure requirements change over time. Review a firm's current Form ADV and Form CRS before engaging it.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Tax thresholds, Medicare premium tiers and required minimum distribution ages are set by federal rules that change; confirm current figures with the administering agency or your CPA.
