How much does it cost a financial planner to do your planning services? Or let us turn it on the other side – how much does it cost a financial planner to render financial planning services for you?

For this you need to know what are the costs that are incurred by a financial planner to run his business. You can then go from the cost side of the business. Let us look at the costs that a financial planning office with a team of 5 financial planners cost to run.

Assuming that there are 5 financial planners doing the work, there have to be 5 people in the back office for supporting these people. Let us assume that there are 2 peons for the servicing functions and one person in administration. This team will need about 1000 sq. ft of space. Assuming 10 laptops, 2 airconditioners, 4 cars costing about Rs. 8L and one car costing say Rs. 15L make up the total business side of the hardware. I am assuming that people pay for their mobile phones, etc. Cars and a/c to be written off over 3 years, also the laptops will be w/o over 3 years. Rent Rs. 450,000 and depreciation Rs. 20L.

Salary of Rs. 6L for 4 CFPs, and about Rs. 4L each for the 5 people in the back office, and Rs. 3L each for the 3 support staff and admin co-ordinator: So a total salary bill of Rs. 50L.

Travel and Conveyance: non billable Rs. 5L a year. (should be billed for every client visit).

So the total cost is Rs. 80,00,000.+ tea coffee, electricity, attending conferences, etc. about Rs. 20,00,000.

Assuming that the Head Planner will want to make Rs. 30L a year – lets add the tax that he will lets round it off to Rs. 50L.

So the cost of running a Financial Planner’s office is about Rs. 1.5 crores.

Now each financial planner has to go about doing some marketing, some learning, etc. – which are largely unbillable hours.

Let us assume that each planner is able to spend 3 billable hours a day, that makes it about 75 hours of client facing time. That means about 300 hours of the employee planners and about 100 hours for the boss man per month. About 4800 hours per annum.

That means about 4800 hours – let us assume it can be pushed to say 5000 hours. So the cost per hour comes to about Rs. 30,000. However it also generates say 20 billable hours at the back office: so the back office chargeable hours will be 75,000 hours – for the work to be done by the 5 back office planners and the front office planners together. So that will be charged at a different rate.

Say the whole cost of Rs. 1.5 crores is to be recovered from the work done at the back office the rate will be Rs. 2000 per hour.

Assuming that a client meets a financial planner for 3 hours and generates 20 hours of work for the back office – in the first year it could take at least that much, then it costs the firm about Rs. 45,000.

It is really difficult to do serious business charging much less than that for a single client – I am assuming that there will be a financial plan in place, one call a month, one meeting a quarter at the least.

Surprised? Well even doctors are when I tell them that they are not charging enough – or that they are doing too much work for the money that they get paid.

If I am a fee only financial planner, I would charge about Rs. 50,000 per first consulting and Rs. 20,000 for an annual review.

See the costing and tell me if there is a mistake – this is of course on offer only for those in the Financial Planning profession.

Caveat: I am not a fee only financial planner. I do an amazing range of work, and bill accordingly. Personally I do not have a financial planner but I run my portfolio past a few equity hating financial people and they are aghast till i explain the logic. Then they are polite 🙂 maybe still aghast 🙂

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  1. Sir, Excellent insight.. But want to know if some one have to pay 50k for few only financial planner and 20,000 for annual review.. how much of investing the client should be doing per year. For e.g if a person invests 2L per year 10% as fee for financial planner does it makes sense.. Because he is expecting a return of just 12-15% at maximum for the 2L he is investing..

  2. Sivakumar I am not even saying you need a financial planner. I refuse to tell you what to do..this blog is about telling you what it costs. Do you need a planner, how much it will cost you, can you afford it – those are all your decisions.

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