Service Model Updates

While we normally aim to provide largely educational content, sometimes the occasion arises that we need to do some direct “promotional educational content,” as is the case today. Specifically, we’ll be sharing some background on our services as they exist today, drivers for upcoming changes, and what you can expect to see in 2026. We’ll be back to our regular programming of more financially educational content next week!

Service Model History

When I took the practice fully independent in 2019, the original service and fee model was structured as follows:

1. Financial Planning
   • A one-time project with 90-day service period, equivalent to a one year annual fee quoted based on complexity factors.
   • Option to continue services beyond the initial 90-day project, paid as a monthly subscription.
2. Investment Management
   • Discretionary investment management with an annual 1% fee.
3. ERISA Retirement Plans for Businesses
   • Non-Discretionary 3(38) Fiduciary Services at a 0.50% fee to start, with declining break points as the plan grew.

Over the following year or two, we merged financial planning into a one-year service separate from investment management, so that clients could opt for financial planning with a 0.25% of net worth annual fee and could separately opt into investment management. Eventually, we merged the planning and investment fees into the current model of 0.50% of net worth as an annual fee, including both planning and discretionary investment management, with the option for clients to continue self-managing if they preferred.

In terms of service model, we shifted from the original 90-day implementation and optional subscription because we saw too many cases of folks coming in for the one time plan, then coming back six or so months later with a myriad of questions and changes that weren’t really well-encompassed by either having them pay another full year fee equivalent or by having them subscribe for planning for a month to get an update; consequently, that model either overcharged or undercharged for the changes that were occurring or the support required to complete what was being asked for.

So, we opted to shift the service model in tandem with the fee changes outlined above to an ongoing subscription agreement that didn’t require a large lump sum payment up front, but did require a one-year commitment for plan development and implementation. The result? Substantially greater success in plan delivery and implementation of financial plans; it turned out that the 90-day window created a rushing experience for some folks, and while the intent behind offering a one time project had been to avoid forcing people into long term relationships when they didn’t want one, the incentives involved meant that many folks at the time were rushing to get through their planning process before the 90-day period expired.

For the past several years, we’ve offered a blended planning and investment management service to clients. As mentioned above, we charge 0.50% of net worth, and offer a four-meeting cycle annually for planning purposes, optional discretionary investment management on an ongoing basis, and ad hoc communication for emergency issues that arise between the normal meeting tempo. While this model has been a much better fit for the majority of our clients since implementing it, we do still have a few clients for whom a legacy offering is in place (e.g., a planning-only or an investment-only relationship), and in most cases, that’s because either their circumstances are still best suited to that limited relationship, or because there would be a material and significant change in their fees that would not be to their advantage, such that they’ve been kept on a legacy model to keep their costs down.

However, that is not to say that the current model has not produced its own challenges!

Issues We’re Seeing Today

There are two material issues we’re seeing today for clients engaged in our current service model.

First, we see a lot of blending of the Q2 and Q3 meeting cycles. In Q2, we review risk management items such as insurance and estate documentation, cash flow (income and expenses), and like to have a review conversation about overall financial goals. On the tail end of Q2 as well, comes the receipt and verification of personal tax returns (assuming they’re not on extension), whereby we then have a quality tax return to use in end-of-year tax planning in Q4. In Q3, we typically like to look at investment strategy overall, but emphasize “held away” assets such as workplace retirement plans, rental properties, and businesses.

There are a variety of challenges that have arisen in this dynamic:

• Many clients do have their taxes on extension and so they may not receive a finalized tax return until all the way into Q4.
• Some clients have ample held away assets, other clients have few-to-none; this means that the Q3 meeting can be the most or least important meeting of the year, client by client.
• The general “summer season” results in a lot of travel delays and disruptions for clients in Q2 and Q3, such that we see around half of our clients skip their Q2 meeting or Q3 meeting. This then often produces a request to “bundle” the Q2 meeting into a longer Q3 meeting, or a longer Q4 meeting to wrap Q3 into.

Second, and specific to investments, we see a lot of friction in the dynamic of letting clients determine whether they will self-manage their investments or whether we will manage portfolios for them. While not an entirely universal problem among those clients who opt to self-manage, we see a couple of common issues among clients who do:

• A substantial increase in requests for “explanation” or “education” in recommended investment strategies, products, or the timing of recommendations. While drivers of these events might be global (e.g. a change caused by the One Big Beautiful Bill Act or the Tarriff volatility in March and April), investment advice is always an individualized activity, and so there can be a substantial work load to advising on held away accounts which may include illiquid or non-uniform proxies for investments we might otherwise recommend or advise against. In worst case scenarios, these explanation or education requests are a pre-text for a client to argue about why their preferred portfolio management style or asset selection is preferable to what we’ve recommended, which fundamentally results in required changes to their financial plan to reflect a less-efficient portfolio and the impacts it has on their long term financial health.
• Implementation delays or declines: Essentially, responding to a request by a self-managing client or sending a pro-active recommendation for an investment activity to a client that is either delayed or ignored to the point that the recommendation “expires,” missing out on an opportunity. In the case of ignored, this often prompts an education conversation about the “why,” but delays can also be problematic as they sometimes are the result of “forgot” or “ran out of time” issues, which then prompts a need to repeat, recalculate, and reassess the value of re-attempting a recommended rebalance or trade.
• Tax issues increase with held away assets. While not always the case, many held away assets are non-retirement or taxable investment accounts. When we directly manage investments for clients, we have an ongoing visibility of their tax situation with regard to their investment portfolio. This allows us to account for net capital gains and losses, qualified and ordinary dividends, and interest. Overall, this gives us greater accuracy when we arrive in Q4 and attempt a tax estimate for the year. However, held away accounts do not provide the same degrees of clarity, and clients may omit or otherwise forget to share taxable events from held away accounts that can have a materially negative impact on the accuracy of a tax estimate for the year.

Neither of these material issues are ubiquitous across clients. Many clients get their taxes done before April 15th, dutifully schedule and attend meetings in Q2 and Q3, and execute portfolio recommendations in a prompt and timely manner with little muss or fuss. However, they are common enough that such issues regularly absorb substantial additional time on our part in trying to deliver services in a high quality and prompt manner across all clients, and regularly cause enough financial friction or loss on the part of many clients, that we aim to address them with these service model changes.

Service Model Updates in 2026

In the interest of attempting to resolve these issues, we will be updating our service agreements for new clients beginning in September, and will be asking existing clients to adopt an updated service agreement to take effect in 2026. There will be two material changes that occur and that I will describe here, along with some notes about the transitional period and exceptions below.

The first change is that starting in 2026, we will adjust to a 3-meeting tempo throughout the year:

• January 1st – April 30^th: Tax Planning & Cash Flow Projections
• May 1^st – August 31^st: Risk Management, Investments, and Estate Planning
• September 1st – December 31^st: End-of-Year Tax Projection & Benefits Elections

The intent behind this change is to give more room for the beginning and end of year tax-heavy planning items, but also to give more space around the summer season for clients to front or back-load planning on investments, insurance, and estate. We intend to try to keep scheduled meetings to the 1-hour timeframe historically used for the quarterly meetings, but may find that the summer period involves an extension to longer meetings as we work through the first year’s iteration. This will also be complemented by our second change.

The second change is to our “DIY investment option.” While we recognize some clients enjoy self-managing their portfolio, and that many future clients may wish to do the same, we have reached a point where we are opting to adjust to a “shall” policy with regard to investment management. There are some important considerations in adopting this policy:

• A client’s objectively established best interest supersedes this policy. That is to say, for clients who have assets that are objectively better off held away rather than placed under our management, they will continue to be so. Examples include portfolios of highly concentrated and appreciated stock (such as equity compensation), rental properties or private business, ordinary bank and emergency fund balances, cryptocurrency, high quality employer retirement plans, pensions, and otherwise illiquid or surrender-inhibited investment products or insurance policies.
• This does not superimpose a requirement that clients invest more money with us than they are comfortable doing so, but the nature of that comfort or discomfort is important. For example, if a client wants to retain a larger cash position or emergency fund than we’d recommend, that is their prerogative. However, if the issue is one of trust or security, then that raises a question regarding our fit as their planner or their fit as our client. We serve as fiduciaries to our clients, and a lack of trust in our advice or capability to manage a client’s portfolio is a fundamental mismatch with our duties of loyalty and care.
• This does not impose a requirement that a client cannot have a “fun money” account that they invest with, or that they cannot invest in assets we don’t normally recommend, such as a small business investment or cryptocurrency. However, these investments should be generally treated as nominal and speculative, and should not be made in amounts so great as to jeopardize their financial welfare if the investment doesn’t go well.

Keep in mind that we cannot emphasize the importance of a client’s best interest enough. It is just important to us that a client’s investments remain where they are or un-managed when it is appropriate, as it is that we take care of the investment end of things when there is no issue with us doing so. This shift is largely oriented around the problems we’ve seen with implementation and investment policy compliance, that is to say, the issues of delays or missing investment activities when it’s important that they be completed in a timely manner. By handling this area for clients going forward, we can ensure that we’re able to attain the best investment results possible within the context of each client’s unique financial plan, and remove the unnecessary friction of the “telephone effect” with regard to directions coming from us as planners and passing to the portfolio through the client as a 3^rd party to the strategy or advice being recommended.

Transitional Period & Exceptions

For those clients who have onboarded in 2025, we will honor the existing first year services agreement to hold four meetings annually if it is requested. We understand that you onboarded with us not too long ago, and that asking you to adjust your service agreement within the first year when you already have an annual obligation is a material change that we cannot unilaterally demand of you. However, at the anniversary of your services agreement, we will want to discuss adopting the change in service cycle with you. For those clients who have been with us since 2024 and before, we are here to answer questions regarding the scope of services or these changes and to discuss with you in a good faith manner why we believe these changes are in your best interest. Your agreements are month-to-month as currently written, and so we will ask that you adopt the new service cycle, or otherwise raise your concerns with us before confirming that you will do so.

For clients who presently self-manage investments, there are three major groups within our client base that we need to address directly:

For those on a legacy service model agreement for planning-only (the legacy 0.25% of net worth subscription model) and who have demonstrated a strong track record of investment recommendation compliance (e.g., implementing in a timely manner), we will not force you to place investments under our management, even if we believe it to be in your best interest. The primary driver for this exception is not a lack of belief in the value of our implementing investment management on your behalf, but a recognition that the legacy planning-only model was priced at a materially different point than the current blended model (0.50% of net worth), and that forcing you to adopt management would materially increase your fees. We are not moving to a “shall” requirement for investment management to increase revenue, and as such we will not force clients under the legacy model to adopt it. However, we will need to see that compliance with investment recommendations and action items remains strong on a going basis, or we will ask to revisit the scope of the services agreement in place.

For those on the current bundled service model agreement who have opted to self-manage rather than delegate management, we will review the specific assets that are under self-management and provide you with an assessment of whether it remains in your best interest to self-manage or whether you should place investments under our management. In the case where assets should remain self-managed (given the aforementioned examples of cases where that is likely), then no change will be required. In cases where it is identified to be in your best interest, you will be asked to delegate investment management to us by the later of either January 30^th, 2026, or the 1-year anniversary of your services agreement if you are still within the first year of services.

Finally, for those clients who are on a legacy investment-only relationship, or who are otherwise an exception case such as participants in a small employer SIMPLE IRA plan or an inheriting beneficiary of an investment account, no changes will occur at this time. If you are interested in discussing a bundled planning and investment management relationship, we can have a conversation about whether it would make sense in your case.

If you are uncertain about which of those groups you might fall into, we are more than happy to clarify at your request. It bears emphatic repeating: the purpose of these changes is not to increase fees, provide less service, force clients into a type of planner relationship they don’t want, or to otherwise “gather assets.” The intent is to ensure that the delivery of our services is more consistent across all clients, that we can reduce errors caused by delays or omissions, and ultimately, help our clients live better and experience their best financial lives.

We are here to answer your questions and address any concerns as they may arise, and more information will be forthcoming regarding the updated services agreements, schedule of the updated service cycle beginning in 2026, and the particulars of whether certain accounts are better left off as-is or otherwise converted to management.