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Articulating Value.


This is not a typical musing and not a complete thought, but something I’ve been thinking about recently so I thought I’d share it.
The main point of focus in the illustration above is the method of payment. In the eight occupations I show, an individual rarely foots the entire bill out of pocket. If you visit a Fee-Only, hourly financial planner you do foot the entire bill out of pocket. I think sometimes it’s hard to articulate the value we (Fee-Only financial planners) provide and even harder when the payment for our services has to come directly out of pocket.
I think you could compare it to a high deductible health plan (HDHP). Research has shown that those who have a HDHP, meaning they pay the first dollars of coverage, are less likely to seek out a medical professional when they probably should. Or at least they’re more selective about the health care they seek out. It makes a difference if you’re responsible for paying out of pocket.
If I recognize that a person doesn’t have adequate life or long term disability insurance and I make that recommendation, how valuable is that to the family if something happens to the main breadwinner? If I can show a young person the tremendous savings of using low-cost index funds instead of higher-cost active funds, the savings in ongoing fund expenses will easily be into the tens of thousands of dollars over their lifetime. In that example we really could put a number on the value, but how do you charge for that? It sounds cheesy, but the value is really in the peace of mind and the value of a portfolio many years down the road and sometimes it’s hard for people to appreciate that here and now and be willing to pay out of pocket for it.