Most fee-only advisors charge "asset-based" fees determined by the amount of money in a customer's account, often about 1%. That contrasts with traditional securities brokers who earn commissions on the products they sell, giving them an incentive to favor investments offering them the highest payoffs.
But asset-based fees can add up. An investor paying 1% on a $200,000 account would shell out $2,000 a year.
As an alternative, consider planners who charge by the hour. A good place to find them is the Garrett Planning Network (garrettplanningnetwork.com), whose 325 members, including roughly a dozen in Southern California, all work by the hour.
"The business model provides access to people who would otherwise have trouble getting into the financial planning world," said Michael Timmermann, who charges by the hour at Timmermann Financial Planning in Torrance. "It lets people contract for as much financial planning services as they need."
Timmermann, who charges $180 an hour, said two-thirds of his clients need four to eight hours. That might seem high, but remember that it's a one-time charge rather than a recurring fee every year.
Another option is a financial website with a human component.
Like other Internet-based services, Betterment.com deals with customers primarily online. However, customers with $100,000 or more can talk free to an advisor on the phone.
The 2-year-old New York website places customers in as many as eight low-priced stock and bond exchange-traded funds, six stock offerings from Vanguard and two iShares bond funds.
On top of the fund fees, Betterment.com charges 0.15% to 0.35%, depending on the assets held at the firm. It's 0.35% for people with less than $10,000, 0.25% for those with $10,000 to $100,000 and 0.15% for those topping $100,000.
What sets Betterment.com apart is access to an advisor for customers in the top tier.
Customers can talk to Stein, the founder, or to a second advisor on the staff. There's no pre-set limit on the number of conversations or their length.
"I haven't had anybody abuse it yet," Stein said. "Knock on wood."
Betterment.com advisors will assess holdings in 401(k) and 529 plans and make general recommendations, but they're based on just a brief review, Stein said.
"We're not running a complicated statistical model on optimizing your 401(k) portfolio, but I feel most of that is hocus-pocus anyway," Stein said. Most customers, he said, just want "some peace of mind that [they're] not really screwing this up."