The demand for financial advice is growing. I believe the aging of America, complexity in the tax code and unusual financial markets are the primary causes. As such, the business of giving advice is also growing, and you should recognize whether you are getting the advice that you need, and better understand how much and how you are paying for that advice.

The demand for financial advice is growing. I believe the aging of America, complexity in the tax code and unusual financial markets are the primary causes. As such, the business of giving advice is also growing, and you should recognize whether you are getting the advice that you need, and better understand how much and how you are paying for that advice.


I am an advocate for getting your entire financial house in order, and working to keep it that way. This goes way beyond having enough money to do what you want. But many people incorrectly think that their financial house is in good shape or they simply are not willing to put in the effort.


The cost of the advice you receive should be understood, and placed in the context of the service and advice you are getting. If you work with an investment advisor or a broker and simply get help with your portfolio, that limited scope engagement should be priced accordingly.


But if that same person or firm works with you on the big picture, and is committed to the implementation part of getting your financial house in order, you should expect the fees to be higher.


Another side of the cost of advice are fees or commissions that may be somewhat hidden. Sometimes these fees or commissions go to the adviser or firm, and sometimes they go to a third-party custodian or service provider. It is fair game for you to inquire and thoroughly understand the nature, frequency and amount of these costs up front and on an ongoing basis as you enter into a new financial planning relationship or try to better understand your current one. Full disclosure of any conflicts of interests along with transparency of commission-based compensation should be a part of your discussions.


Cost, however, isn't the only relevant factor. The levels of service, competency and performance are what really drive the relationship. If the relationship is of limited scope or single service, cost matters more. But if the relationship is holistic, and the value of getting everything together is far beyond the numbers or performance, then cost may take a back seat. When it comes to finances, few people really understand this. But when it comes to clothing, automobiles and other products or services that we value, we as consumers are not afraid of the higher cost items where there is demonstrated value.


John P. Napolitano is the CEO of U.S. Wealth Management in Braintree, Mass. He may be reached at jnap@uswealthcompanies.com.