The College of Financial Planning is looking for explanations for a 12.7% dip in financial planners' earnings last year -- and they can't blame the recession.
It turns out that planners' income peaked in 2009, as the markets were recovering and the recession was on the wane. This is a bombshell.
As it is, the average planner made $190,922 last year, which is even 2% under the $195,394 the College of Financial Planning says was the average back in 2008, when the markets were at their worst.
While the College says "researchers suggest that the lingering effects of the economic recession are likely to blame," there's not much detail, and in fact the word "recession" doesn't appear in the report itself.
Maybe the public's interest in getting a financial plan is a trailing indicator that peaks during and immediately after a recession, then bottoms out as the economy recovers.
And maybe the fee-only planning model is showing signs of strain as financial plans themselves become commodities or even loss leaders handed out free with a commission-backed purchase.
As the College says, 36% to 37% of advisors do not charge for single-topic or even comprehensive financial plans. Those who do charge for plans can charge as little as $100 per focus area.
These are real "race to the bottom" prices. It's the burden on more value-added planners to differentiate themselves from the commoditized one-plan-fits-all types, but that requires new ways to think about the business beyond the old "planning is best" mentality.
Interestingly enough, the College also found that fee-based or hybrid models are on the rise. A full 60% of advisors now say "fees and commissions" are their business, while fee-only planners now represent only 17% of the market.