Should I take a lump sum payment versus an annuity when I retire? And what about those stock options my company granted me?
Financial planners help clients sort through these and other tricky compensation issues every day.
Now the professionals upon whom millions rely on for financial advice are facing a complicated remuneration issue of their own.
For decades, many financial planners have relied on a rather simple revenue model, taking a percentage of the money they manage and invest on behalf of clients.
But the AUM model now faces a major challenge with the rise of low-cost mutual funds and ETFs that track the major market indices and offer rock bottom fees based on passive management.
However, while it's harder to justify charging sizeable fees for investment management, the good news is that financial planners are in more demand than ever before.
The demand for financial planning and related services, as opposed to stock market insights, is on the rise.
And while many planners still rely to some extent on the old AUM model, a growing number are experimenting with new ways of charging for broader array of services.
With less focus on investment advisory services, planners say they are also freed up to build a broader base of clients, including young professionals and couples who are building wealth but who may not have enough assets yet to manage.
"Young clients often find it difficult to work with a financial planner or investment advisor who charges AUM because they don't meet the advisor's minimum," says Margaret Doviak, a CFP and owner of DM Wealth Management in Norman, Okla. "The (financial planning) community tells millennials to be prudent and save while also telling them that they won't work with them."
An increasingly awkward fit
For a growing number of planners, the AUM model no longer a smooth fit with the work they do with clients.
Planners have traditionally charged up to a percent of assets under management as an all-inclusive fee.
That made sense when investment advisory services were the main focus of a financial advisors job, with financial planning an add-on or a way to get clients in the door.
But today's financial planner is fast becoming the quarterback for a client's financial life and doing far more than a one-and-done financial plan. Planners are offering, and clients are seeking, ongoing financial consultation, advice and guidance, with the ability to bring in specialists, like tax attorneys and estate planners as needed.
James Guarino, partner and director of wealth and tax advisory services at MFA Asset Management, said his firm recently took a look at its services and came to the realization it was providing far more than just investment management.
In particular, the firm has been doing substantial financial planning work with clients, notes Guarino, both a CFP and a CPA.
The firm plans to keep charging for assets under management. But in addition, MFA will now charge hourly consulting fees, annual retainers, or fees based on specific projects.
"We are also changing our client fee model," Guarino says. "In effect, we discovered we were providing much more than solely AUM/investment advisory services to clients. "
There are also inherent conflicts in the AUM model as well, which offers a strong incentive to collect as many assets from a client as possible, planners say.
That, in turn, can create potential conflicts of interest for the planner. For example, if a client wants to buy a home or move money to another platform outside the advisor's control, that would lower the amount of assets under management, and, of course, the planner's fee.
Citing the potential for conflict, Alex Offerman, founder and senior financial planner at Model Wealth in Joliet, Ill., says he is now in the process of transitioning from charging for assets under management to a fixed fee/hourly model.
Clients like the new approach because they understand what they are paying and exactly what they are getting in return, Offerman notes.
"In our opinion, fixed-fee/hourly based planning is the least conflicted model out there," Offerman says.
Broadening the client base
But there's another good reason for moving away from AUM and embracing a fee-for-service: It can dramatically broaden the range and number of potential clients.
Many people are ill-served by the focus on asset gathering -- they need financial guidance but they simply don't have a large enough investment portfolio for a financial advisor to be interested in, planners say.
Kaleb Paddock, founder of Ten Talents Financial Planning in Parker, Colo., offers clients flat fee planning and a "Netflix-style subscription financial planning services."
"I'm finding these options very popular with the 25-45 year old client-families who don't yet have millions of dollars to invest but who still want professional guidance," Paddock says.
And for Kayse Kress, a certified financial planner in Las Vegas, moving away from the AUM model has given her the opportunity to work with a group of professionals that need her services but wouldn't otherwise qualify: Doctors.
Her firm, Physician Wealth Services, changes an upfront fee, followed by five meetings that cover everything from goals for saving to insurance issues. Her doctors, who have high salaries but also six-figure student debt, pay a monthly fee for an ongoing relationship.
"We have created an avenue for them to turn without worrying about their current net worth," Kress notes.