The Overall Problem
Unfortunately, the business models, structures and cultures of the below professions generally are set up to put lots of energy into getting your money and a relationship started but once that is accomplished, the communication, concern and proactive behavior you deserve is either gone or significantly minimized. I have heard many stories from clients saying they rarely hear from most of them once the initial product or service has been sold. Most never contact you to "just check in" periodically and see if your life has changed once you've paid for a service, product or transferred your assets to them. How can they do what's best for you or to check to see if the product or services you have with them are still appropriate (and charge you fees) if they don't know who you are and what changes or events are happening in your life?
Most of them are very narrowly focused when it comes to clients and customers. They are focused on your money, selling you products and charging commissions and fees. Most don't know, don't ask, and/or don't care about your overall personal and financial picture. They don't ask about what keeps you up at night, the stresses in your life, your concerns, spending behaviors and other current and future considerations. Many will say that's simply not their job. Others wait for you to come to them looking for some sort of help and then charge you hefty hourly rates for work that many times you can (at least partially) do yourself; or at least topics you can educate yourself on so the time spent with them is less.
That's the difference with Hern Financial Coaching. We don't and aren't trying to sell you anything. We don't want you to open a new checking account, don't charge you hefty hourly fees to change a handful of words in a legal document, do data entry on your tax forms (and lick stamps on the envelope and put it in the mail), or perform a song and dance to get you to open or move your retirement account to us and then stop talking to you. This isn't to say the below professions are "bad", just that the business models are limiting and generally not flexible enough to create an atmosphere where there is optimal benefit and holistic value for you.
We are here to comprehensively look at your assets, liabilities, insurance, tax questions, spending and savings behaviors, business structure and marketing, life stresses, goals and future desires.
We are here to help educate you to look up and read your credit report, research things online, understand property assessments, and how to complete a home or business budget.
We are here to help you price your business products, create marketing materials, set up bookkeeping procedures, and prioritize debt repayment.
We are here to listen to you, educate you, encourage you, help you and add value to your personal, business and overall financial life.
We are here to help you succeed, reach your goals and realize your dreams.
Contact us at info@hernfinancialcoaching.com or call at 716.763.1234.
Hern Financial Coaching focuses on you, your situation and what's best for you and we don't try to fit, wedge or force your life into what's best for us.
Below is a list of some of the major finance-related businesses out there who compete for your time and hard-earned money. With these businesses, there is a huge potential for hidden agendas, conflicts of interest and a much narrower focus and examination of your life instead of a comprehensive review of your goals, financial situation, spending and savings behaviors and overall financial health.
Financial Advisors / Financial Planners
They make money generally in a combination of three ways: 1) through commissions on individual investment trades/fees; 2) a fee for a Financial Plan document; and 3) charging you a "wrap fee" or certain percentage of assets they have of yours (say 1 ½% per year). If you own mutual funds, you also pay the mutual fund companies management fees (some of which also get sent back to your Financial Advisor – known as "trailers").
They are always looking for assets – that's what they need to survive. They either encourage you to transfer them from another Financial Advisor, transfer cash or CDs from one of your bank accounts, or when you leave an employer, move your 401(k) or 403(b) account to them. They aren't really interested in your debts or liabilities since most of the time they can't make money from you that way.
Bankers
Banks make money on you generally two ways: 1) through overdraft charges and various banking service fees, and 2) by the "spread" on any money they loan you. They borrow money (say at 4%) and loan you the same money (say at 9%) - the difference is gross profit to the bank. Banks also want your main operational checking account because statistics show they make more money from you if they have your main checking account. The more services they provide you (i.e., checking, savings, credit cards, mortgages, business loans, online banking, etc.) the more likely they are to make you feel emotionally engaged with them and in turn, a greater likelihood of you going with them for more products and paying some of the above fees and loan interest.
Insurance Agents
Insurance companies make money by charging you a premium for various insurance products and paying out less than they collect. Automobile, homeowners, personal liability, renters, life and business-related insurance are the most common. They generally go through their checklist of questions, tell you how much coverage they feel you need and then ask you for a check. Then they look for those renewals every year from existing customers and pocket commissions off the policies.
Realtors
Realtors get commissions (generally 2% - 6% depending on company structure) based on the selling price of a piece of property (the higher the better for them). If one realtor is used, they get 100% of the commission – if the seller has a realtor and the buyer uses a realtor then they split the commission 50% - 50%. They want the sale to close – period. They hope you have some cash for a good faith initial payment (many times $1,000) as well as 5% - 20% down payment and your credit is good (but they don't do any of that background work – that's where a mortgage company or bank comes in).
Accountants
Accountants know tax rules, regulations and IRS opinions. Some specialize in personal taxation while others focus on business taxation. For filing a simple Federal 1040 with itemization, they can ding you $250 or more. C- and S-Corporation filings can cost well over $500. They generally charge you a billable rate plus postage, electronic and postage fees. They focus in a couple areas: 1) completing annual and quarterly tax forms; 2) helping you decide on what type of business structure to initially set up for a new business (with the hopes of doing your tax documents each year); and 3) periodically answer general taxation questions you may have throughout the year. New tax rules can be complex and difficult to review – that's one of the reasons why they are there. However, when it comes to annual tax forms, many accountants out there ask you to provide them with a list of documents (like your W-2 wage forms and 1099 statements) and then simply act as glorified data entry clerks plugging your numbers into their computer and telling you if you owe or don't owe any money to the government (and then send you an invoice).
Attorneys
They are used for a variety of reasons – buying a property, drafting a will, planning an estate, negotiating a divorce or reviewing a wide variety of legal documents and agreements. Sometimes they charge a retainer fee up front which you must pay before they do any work for you (usually over a $1,000), will tell you the approximate cost of the service (i.e., $500 for a particular document preparation) and other times you simply pay an hourly rate (generally $150 - $600 an hour). Always ask for an estimate! Their scope is quite narrow – you go to them for a specific purpose and they help you with that issue in a legal way – that's it. They talk on the telephone, send faxes and emails and work many times behind the scenes on your behalf. They are in the business of reading documents and working within the laws set forth by local, state and federal governments (unfortunately most of the lawmakers are attorneys) so the hurdles, hoops and complexities of various laws consumers have to navigate through makes it unbearable and sometimes impossible to try to do on our own without some legal advice.