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The year was 2013, and Alexa von Tobel launched LearnVest to bring financial planning to the masses. Instead of paying enormous fees, LearnVest would make financial planning accessible to everyone. Now, Grove wants to do the same thing. Grove began in 2016, and they’ve made headlines recently for start-up funding. Let’s review and compare Grove to alternatives such as LearnVest and a few robo-advisors.
What is a financial plan?
A financial plan looks at where you are today and where you want to go. It defines your short- and long-term financial goals and what must be done to achieve them. A financial plan is stated in document/report whereas financial planning is an ongoing activity to support objectives. For example, a change in your projected retirement age will warrant updates to your plan.
Do you need one?
No, a financial plan isn’t a necessity. However, you should go through the experience at least once and again when material events occur. Financial planning is so much more than any financial matter or process. It ties together cash flow, insurance, investment, retirement, taxes, and estate planning to create a financial roadmap. It reviews your goals and current situation to produce recommendations for you to follow. Most people under the age of 30 don’t need a plan because many things are still changing in their lives, for example, career, relationships, living arrangements, and so on. After 30, getting a financial plan makes sense.
A financial plan is valid from year to year unless there is a significant career/life change or bear market. Also, the more actuals deviate from goals, the more reason to revisit a plan. Having a child, getting divorced, losing a spouse, relocating to a new country, and receiving a sizeable inheritance or pay increase would warrant a review/update to your plan. Secondly, paying annually for a financial plan is usually wasteful unless you have complicated financial affairs. For example, a business owner or high net worth investor might benefit from updating her financial plan each year.
How much does a financial plan cost?
The cost of a financial plan depends on how the advisor administers his or her fee. For instance,
- A percentage of assets under management (AUM), typically anywhere from 1 to 2 percent per year.
- Commissions paid to the advisor from the sale of financial or insurance products.
- A combination of fees and commissions.
- An hourly rate.
- A one-time flat fee.
- A quarterly or annual retainer fee.
Regardless of the fee structure, you can expect a price tag of $1,000 to $5,000 for a financial plan through a traditional advisor. Grove, LearnVest, and many robo-advisors provide financial plans at more affordable prices than conventional human advisors and planners.
At Grove, each client starts by working with a Certified Financial Planner (CFP) to put together a comprehensive plan. Their priority is to understand your goals and create a strategy for you to accomplish them. Your plan starts with an overview of your current financial situation including all your assets, debt, income, and expenses. You’ll get specific recommendations on where to hold your assets, how much to save, what investments to keep in your portfolio, and more. They’ll help you understand what you’ll need to do to prepare for your goals. The most important part of the plan is your to-do list that summarizes the specific tasks you must complete. You can access your plan online and check off your to-do’s as you accomplish each activity.
After you complete your online profile and have an initial call with an advisor, they’ll deliver your plan in two to four weeks. Clients do not choose who they want to work with but are matched with advisors based on their needs. Grove charges $600 annually for financial planning.
Through Grove Invest, you can partner with an investment advisor to implement, monitor, and rebalance your portfolio. The advisor will manage your investment portfolio as part of your overall plan. To access Grove Invest, you must first get a financial plan. Clients get their first $100,000 managed free of charge; otherwise, they pay 0.25% of assets under management. An account of $200,000 would pay $21 in fees per month and no trade commission costs. Grove builds portfolios with low-cost index funds like many robo-advisors and intelligent human advisors (dumb advisors make portfolios with actively managed funds to get wealthy for themselves).
LearnVest leverages financial technology to create simple, affordable, realistic plans for anyone who wants to feel confident about their money and optimistic about the future. They provide several financial planning tools for free. You can connect your accounts to create a budget and track your transactions. Their free financial check-up service determines your financial standing.
For a one-time fee of $299, plus $19 monthly, LearnVest will pair you with a CFP. Your planner will create an action plan to help you reach your financial goals. LearnVest focuses on budgeting and saving, not investment advice or managing investments.
Betterment is an online financial advisor that serves one purpose: to help you make the most of your money. For one low, transparent advisory fee, they give you personalized, fiduciary advice for retirement planning, building wealth, and other financial goals. They invest your money, working to lower taxes and increase long-term returns. Their financial plans incorporate a “goal-based investing” approach. They start with your goal—the reason you’re investing. Then, they make various recommendations for your objective, for example, retirement, real estate, family, career, inheritance, and market volatility.
Betterment charges 0.25% for investment advice with unlimited access to licensed experts who can answer your financial questions. They charge 0.40% for in-depth advice and unlimited access to their CFPs. For a dedicated one-on-one relationship with an advisor, clients can work with a vetted advisor from Betterment’s advisor network. Advisors may have minimum balance requirements, which typically begin at $100,000, and will charge an additional fee for their services.
- Charles Schwab
Charles Schwab provides a full range of brokerage, banking, and financial advisory services. Schwab Intelligent Advisory combines robo-advisor investing with unlimited professional guidance. Plan for retirement, college, and so on and connect your financial accounts to find out if you’re on track to meet your goals. You can schedule a complimentary video or phone consultation with a CFP. During the appointment, you’ll fine-tune your plan, get recommendations for a diversified portfolio, and receive an action plan to get you on track toward your goals. Revisit your plan anytime and access a financial advisor as well as support when you need it. Schwab has an investment minimum of $25,000 and charges 0.28% on AUM.
- Personal Capital
Personal Capital combines financial tools with guidance from registered financial advisors. They focus on personal and objective wealth management solutions for complex financial lives. Connect your external accounts to get a comprehensive view of your financial life, then schedule a free consultation with an advisor. You’ll discuss your investing goals, risk tolerance, retirement and plan for things like a new baby, a business, saving for college, or remodeling your home. They’ll help you identify your retirement goals to make sure they build an investment plan that fits your needs.
Personal Capital has three account levels, i.e., investment service, wealth management, and private client. Their accounts are based on assets held with them, for example, their investment service is for clients with up to $200,000. The more money you have, the more access you get. Their management fee starts at 0.89% and decreases for more assets.
- Vanguard Personal Advisor Services
Vanguard is one of the world’s largest investment companies, offering a large selection of high-quality, low-cost mutual funds, ETFs, advice, and related services. Vanguard Personal Advisor Services combines the best of high-touch and high-tech to help you with your real-life investing needs. An advisor will work closely with you to craft a personalized, goals-based financial plan according to your unique situation, then manage your portfolio to help you reach your goals. They listen to your needs, develop a personalized plan, and invest using their time-tested investment strategies. Once you’re enrolled, you can call or email a Vanguard advisor at your convenience. Vanguard PAS requires a minimum of $50,000 and charges 0.30%. Lower fees apply to assets under management of $5 million or more.
Wealthfront is the only automated financial advisor to offer a combination of financial planning, investment management, and banking-related services exclusively through software. The company has quickly become the automated advisor of choice among people in their 30s and 40s. Anyone with $500 can open a Wealthfront investment account, which features a comprehensive automated financial planning service called Path.
Path helps you prepare for your financial future. You can set up Path in a few minutes and get answers to critical questions, for example, can I live my current lifestyle in retirement? After you’ve connected your accounts, Path will automatically update your plan based on changes in your finances and spending. Path gives you a comprehensive view of your finances, so you can immediately see how your actions today will affect your future goals. The more Path learns about you, the better advice it can give.
Grove provides access to planners and advisors like their competitors, so they don’t offer anything new or unique. However, you can get a financial plan without committing to investment management services, which differs from most robo-advisors.
Scenario one: You want a financial plan and ongoing advice, not investment management. You have a $100,000 portfolio.
|Plan/Advice Only||Annual Cost ($)||% on 100k||Note|
|LearnVest||Yes||228||0.23||One-time fee of $299 applies|
Grove and LearnVest charge roughly the same for the first year then LearnVest is much cheaper. Grove builds plans with a focus on investing whereas LearnVest leans toward cash-flow, budgeting, and saving. Robo-advisors don’t accommodate one-off financial plans.
Scenario two: You want a financial plan and investment management. You have a $100,000 portfolio.
|Plan/Management||Annual Cost ($)||% on 100k||Note|
|Grove||Yes||600||0.6||100k managed for free, 0.25% above|
|LearnVest||No||Does not focus on investing|
Grove doesn’t measure up to established robo-advisors who charge less and deliver as much if not more. The problem with Grove is that they force enrollment into their financial planning service to access investment management, which will incur a cost of 0.25% above $100,000 managed. Grove’s fee for $200,000 managed works out to $850 ($600+$250) or 0.43% on AUM a year. That’s expensive given the alternatives.
Scenario three: You only want investment management. You have a $100,000 portfolio.
|Management Only||Annual Cost ($)||% on 100k||Note|
|Grove||No||Must get a plan to access management|
|LearnVest||No||Does not focus on investing|
Grove only offers investment management to financial planning clients, so they are not a good fit alongside LearnVest. The robo-advisors listed provide low-cost, investment services without forcing clients to get financial plans.
Grove might be useful for financial plans and planning, but they would not be my first choice. Betterment, Schwab Intelligent Advisory, and Vanguard PAS are fantastic alternatives. Personal Capital is an excellent choice for HNW individuals and people with complex financial matters. While Wealthfront is my favorite robo-advisor, Path is too experimental and new age for me to recommend. Financial planning courses are available online at Coursera, a top-rated e-learning platform.