Financial Advisers Reach Out To Middle Class, But Many Still See It As Only For The Rich

Jan. 28—Keith Ori may be a financial adviser's worst nightmare. He's heard their spiels, even consulted a few in his time. But these days he's just fine managing his own cash.

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"At this stage, I'm comfortable doing it on my own," the Orlando real-estate investor said. "It's so tough finding someone who's really good, who'll give you truly objective advice. Most aren't interested in the middle class anyway — they just want to deal with millionaires."

It has long been the view from Main Street that financial-advisory services are only for Wall Street, or at least only for those with enough money to invest large sums there. Professional financial advice, from retirement planning to investment management, has been viewed as out of reach for the middle class.

But in the wake of the 2007-09 recession, with shrunken portfolios to manage, more advisers have begun offering financial advice that's more affordable and accessible. With an approaching wave of baby-boomer retirees, more financial planners are offering pay-by-the-hour sessions geared toward those of modest means, the "semi-affluent," in addition to the percentage-of-funds-under-management pay scale used with wealthy clients.

That approach had drawn a lot of interest but not nearly as much follow-through, planners in Central Florida say.

"You have an increasing number of certified financial planners offering hourly service; and you have more people looking into it, especially baby boomers who are now thinking retirement," said Charlie Fitzgerald, an Orlando financial planner and president of the Financial Planning Association of Florida.

"You have all those things coming together over the last decade," he said. "But I'll have to say I have received very little new business from the hourly side. There's still this sense out there that people who work with financial planners have to be rich. And that is just not the case."

In some ways, the financial-advisory business has helped create the impression that only the rich need apply. Many planners became "wealth managers," requiring clients to have a minimum of $500,000 to $1 million in "investable" assets.

Marjorie Murphy of Orlando says she's far from being rich, yet the university office manager signed on last year for a financial-planning session with Fitzgerald. At 61, she wanted help with her retirement planning and with other aspects of her personal finances.

She received comprehensive advice that involved, among other things, re-balancing her 403b retirement plan to reduce her exposure to riskier stocks, and updating her estate planning. The process took less than three hours and the cost — about $500, potentially thousands of dollars less than a commission or what an asset-based adviser would charge — was well worth it, Murphy said.

"I wanted to make sure I used a financial planner that I knew wouldn't be biased and just selling me his own products," she said. "For me, in the end, it was kind of like a confirmation of some things I was already doing. But he definitely fine-tuned the direction where I was going."

Even pay-by-the-hour services — which may charge from $150 to $300 an hour — may seem a little pricey to cost-conscious workers or retirees without sizable investments. And while Murphy landed a good rate for Fitzgerald's advice, it helped that they were already acquainted and attending the same church. Otherwise, the total cost of a comprehensive financial plan can be much higher — $1,000 or more — depending on the complexity of the person's financial situation.

Some may balk at paying such fees for financial help, even when it comes from experts who are supposed to be unbiased sources of advice, such as certified financial planners, or CFPs. (Note: CFPs and registered investment advisors, or RIAs, are required by fiduciary rules to always put the best interests of their clients first, ahead of their potential compensation. Different ethics rules apply to stockbrokers and insurance-sales agents.)

The hourly-fee business has been slow to develop, said Cary Carbonaro, a financial planner in Clermont affiliated with the Garrett Financial Planning Network, a Kansas-based company that specializes in fee-based financial advice.

Many middle-class investors are still wary of the persistently turbulent stock market, said Carbonaro, and some are still dealing with fallout from the recession, such as personal debt, employment uncertainty and other issues. A few potential customers come in hoping that the financial advice will be free, she said, much like the help offered by non-profit consumer-credit counseling services.

As a result, Carbonaro said, she sees only a few hourly-fee clients a month.

"A lot of people want to get professional financial help, but they are often scared, don't know what they don't know, and don't know what questions to ask," she said. "But they do know they don't want to pay a fee. They don't understand that it is just like they would pay a lawyer or any other professional."

With huge numbers of middle-class baby boomers approaching retirement in Central Florida and elsewhere, it is especially important for them "to understand that financial planning is really available for the average man or woman," Fitzgerald said.

"I don't know why more people haven't responded. I think maybe they don't understand the real value of it. They hesitate to pay $150 or $300 an hour for professional financial advice, and don't see that it could save them in a huge way in the future."

rburnett@tribune.com or 407-420-5256

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