Bundle Up? Not When It Comes To Financial Services

For many people subscribing to satellite services or cable television over the last couple of decades, the business model has been “bundling services” like television, Internet and phone together for a single rate. However, in this system, many customers are paying for TV channels that they never watch or for a landline that they rarely use. With the increased popularity of “cutting the cord” to cable and satellite TV in order to watch TV series and films on Over-The-Top (OTT) content devices, there have been calls, even from Washington, for a “pay for what you watch” or “a la carte” approach.

This same “bundling services” approach has been used in the financial industry, where some financial services providers package together services like investment advice, financial planning, tax advice, estate planning, etc. While on the surface the “bundled package” can seem attractive by offering the different services for a single price, there are underlying reasons for concern:

• Fees: Why Pay For What You Don’t Need?

  Whether you need these services or not, the firm will charge you for it! Because the investment firm has to employ tax professionals and tax advisors, it will inevitably pass the cost along to the consumer. These costs usually come in the form of a fee that is not always transparent and you’ll be paying for them in to perpetuity. Just as with the television, Internet, and phone packages, you may be getting charged for services you really do not need as part of the “bundle.” It is important to assess how the costs are being allocated when the main focus is growing the investment portfolio.

• Conflicts of Interest

  Investment advice and financial planning are two distinctly different disciplines, and the lines can become blurred when they are lumped together under the guise of money management. Often, financial planners will be pressured by the investment firm to paint a more positive financial plan by overstating future expected returns or lower nominal rates of inflation. The most valuable financial plan is one that is conservative in nature. While we offer financial planning for our clients, we try our best to keep the plans conservative, so that the investor can make a more informed decision on how to spend their capital in retirement.

• Awkward Situation

  If you are unhappy with how one part of your services is being handled in a “bundled package”, it can make for an uncomfortable arrangement to stay with the advisor.

• Lost In The Shuffle

  In “bundled” arrangements, financial advisors can sometimes be looking to standardize services for their clients with basic financial plans and investment advice. Consequently, if the client needs a more customized approach to their particular situation, they could get lost in the shuffle.

If you are paying for financial planning as part of an advisor’s fee, but you may only need it on occasion, why pay for it as part of a “bundle”? Unless you absolutely need financial planning, you may be better off having your financial advisor bill you separately, because it is the more transparent and cost-effective way to do things. Or because they are distinctly different disciplines, it might simply be better to get an investment manager to manage your money and a financial planner for planning. Just as with entertainment “bundled services,” get what you are paying for and pay only for what you need.

As a fee-only financial advisor with years of experience, Goff Financial Group will always be transparent in managing your investments in the most cost effective way possible. Our business model is not a “one-size-fits all” approach with “bundled services”, but a customized long-term investment strategy to your unique situation. We will only bill you our fee for managing your investments, thus eliminating conflicts of interest from product sales or commissions so that you get exactly what you are paying for in order to achieve your financial objectives.

If you would like to learn more about our investment approach at Goff Financial Group, simply give us a call at 713-850-8900. We would be happy to answer any of your questions and address any of your financial concerns.