Podcast Summary: Eric Simonson: The Case for Flat-Fee Financial Advice

The Long View by Morningstar, hosted by Christine Benz, Dan Lefkovitz, and Amy C. Arnott, features an insightful conversation with Eric Simonson, CEO of Abundo Wealth and head of the Advice Only Network. Released on June 24, 2025, this episode delves into the evolving landscape of financial advice, focusing on the rise of flat-fee, advice-only financial planning as an ethical and cost-effective alternative to traditional models.

1. Introduction to Advice Only Financial Planning

Eric Simonson begins by defining the "advice only" model: financial planners who provide guidance without taking custody of clients' investments or selling financial products.

“We only give advice. You know, we're not selling products, we're not taking custody.” ([01:41])

This model emphasizes transparency and ethical standards, distinguishing itself from commission-based or assets under management (AUM) models. Simonson highlights that it has gained traction over the past decade, offering various fee structures such as hourly rates, project-based fees, and ongoing monthly subscriptions.

2. Advantages Over Traditional Models

The conversation contrasts the advice-only approach with the dominant AUM model. Simonson outlines several benefits:

• Conflict of Interest Reduction: Without product sales or AUM fees, advisors can offer unbiased recommendations.

  “If they're recommending, hey, go get life insurance, they really truly want you to have that because they're not making a commission on that.” ([04:54])

• Cost Efficiency: Flat fees can be more affordable over time compared to the compounding costs of AUM fees.

• Inclusivity: Unlike AUM advisors who may require high minimum assets, advice-only planners can serve a broader clientele, including those with lower net worth.

3. The Persistence of AUM Model and Industry Inertia

Despite the advantages of the advice-only model, the AUM-based approach remains prevalent due to industry inertia and economic incentives favoring AUM fees. Simonson notes:

“I think it's largely inertia. You know, that's just kind of how it's been done and there's never been anything to really challenge that.” ([06:58])

He also points out that AUM fees provide advisors with predictable, scalable income tied to market growth, making them financially attractive.

4. Encouraging Financial Advisors to Adopt the Advice Only Model

Simonson offers guidance to young advisors considering the advice-only path:

• Ethical Alignment: Ideal for those prioritizing transparency and client-centric ethics.

  “It's the right model for you if you really are led with your ethics and morals.” ([08:33])

• Business Growth Potential: Despite lower per-client income, the ability to onboard multiple clients can offset initial revenue differences.

  “You might bring on three or four times as many clients... offset that.” ([08:33])

5. Addressing Supply and Demand in Advice Only Services

The Advice Only Network faces a supply-demand imbalance, with high consumer interest but limited available advisors. Simonson attributes this to:

• Low Consumer Awareness: Increasing visibility and education are essential.

• Platform Solutions: The Advice Only Network aims to bridge this gap by showcasing advisors and facilitating client connections.

  “We created the advice only network... to showcase advisors and let consumers spread out the wealth.” ([10:51])

6. Rigorous Vetting of Advisors

To maintain trust, the network employs a stringent vetting process:

• Regulatory Checks: Ensuring proper registration and compliance.

• Transparency Verification: Reviewing advisors' fees and compensation structures to confirm they are purely advice-based.

  “We want them to really confident that they're looking at truly advice only advisors.” ([12:54])

7. Diverse Fee Structures and Client Fit

Advice-only advisors offer various fee arrangements, each suiting different client needs:

• Hourly Fees: Suitable for clients with specific, short-term questions.

• Project-Based Fees: Ideal for one-time services like Roth IRA conversions.

• Monthly Subscriptions: Best for clients seeking ongoing guidance through life changes.

Simonson advises clients to match fee structures with their financial needs and circumstances.

“If you're looking for a specific question to be answered... That's great for hourly or project-based advisors.” ([14:16])

8. Hybrid Models Combining Flat Fees and AUM

While advocating for advice-only, Simonson acknowledges hybrid models where advisors charge flat fees for planning and modest AUM fees for portfolio management. He supports this approach if it maintains fee transparency and aligns with client preferences.

“Anything that moves towards more fee transparency and lower fees... That's a reasonable strategy.” ([16:08])

9. The Undervalued Role of Financial Planning

Financial planning is often overshadowed by investment management in client perceptions. Simonson emphasizes its critical role in aligning financial decisions with personal values and life goals.

“Consumer have overvalued the investment planning... and drastically undervalued the financial planning part.” ([17:56])

He argues that comprehensive financial planning can have a more profound impact on clients' lives than mere investment advice.

10. Convincing Clients of the Need for Financial Planning

When clients are skeptical about financial planning, Simonson recommends initiating conversations around everyday financial behaviors, such as budgeting and spending tracking, to illustrate the broader benefits of planning.

“We ask if they track their spending... That starts to almost crack open a little door.” ([19:50])

11. Adapting to Virtual Advisory Services

The shift to virtual meetings has become widespread, enhancing convenience and accessibility for clients across various states. This trend is especially appreciated by younger generations comfortable with digital interactions.

“We have clients in over 40 states... Most advice only advisors are almost entirely virtual.” ([21:21])

12. Catering to Younger Clients’ Preferences

Younger clients prefer models that avoid high AUM fees, favoring flat fees or subscriptions instead. They are tech-savvy, comfortable with DIY investing, yet seek professional guidance for strategic planning.

“Younger folks are way more comfortable with technology... But they still need somebody to help tell them if they can retire.” ([22:38])

13. Financial Arrangements and Platform Economics

Advisors on the Advice Only Network pay a nominal fee to be listed without the platform receiving any commissions from client engagements. This ensures impartiality and promotes genuine client-advisor matches.

“We don't have any financial incentive over one person or another... 'Find the best fit.'" ([24:07])

14. Building Abundo Wealth: A Case Study

Eric Simonson founded Abundo Wealth to offer financial planning without the traditional AUM fees he found detrimental to client outcomes. By allowing clients to manage their investments independently while providing strategic advice, Abundo has successfully attracted clients seeking cost-effective, ethical financial planning.

“I wanted to invest in the Vanguard indexes... people were actually really excited about keeping their investments at Fidelity or Vanguard.” ([25:30])

15. Client Demographics and Financial Stories

Abundo's typical client is a couple in their mid-40s with a net worth of $1-2 million, navigating complex financial stages such as saving for children, tax planning, and approaching retirement. The firm creates a dynamic "financial story" for each client, continuously updating it to reflect life changes and financial milestones.

“It's a living, breathing document... clients have access through our website and app.” ([28:00])

16. Aligning Budgeting with Personal Values

A significant aspect of Abundo's approach is ensuring clients' spending aligns with their personal values. Common areas of overspending include delivery services and dining out. Simonson advocates for incremental budgeting adjustments that respect clients' lifestyles while promoting financial health.

“Maybe cutting Netflix for six months... just getting a little bit of momentum.” ([33:47])

17. Support for FIRE (Financial Independence, Retire Early)

Abundo Wealth actively supports FIRE enthusiasts by providing tailored financial planning that respects their desire for early retirement without relinquishing investment control. Through personalized strategies and conservative withdrawal rates, Abundo assists clients in achieving sustainable financial independence.

“Most people are pretty excited about taking that on... you're still in charge.” ([34:13])

18. Portfolio Management and Investment Strategies

Abundo advocates for passive index investing, maintaining a unified team view while allowing minor adjustments based on individual client needs. They recommend maintaining international diversity, typically allocating 20-25% of a stock portfolio to non-U.S. investments.

“We are big believers in passive indexes... tailor small changes based on clients’ needs.” ([40:09])

19. Navigating Market Uncertainty

In times of market volatility, such as tariff-induced uncertainties, Abundo focuses on assessing and reaffirming each client's risk tolerance. The firm emphasizes staying invested and making informed portfolio adjustments without succumbing to panic-driven decisions.

“The best hedge against inflation long term has been the stock market.” ([47:59])

20. Managing High-Interest Debt

For clients burdened with high-interest debts, such as mortgages or credit cards, Simonson advises aggressive repayment strategies. By comparing debt costs to potential investment returns, clients can make informed decisions about prioritizing debt elimination.

“If your cost is 8%, that's a pretty decent long term rate to lock in on that savings.” ([50:29])

21. Travel Hacking and Financial Benefits

Abundo integrates lifestyle preferences, such as travel, into its financial planning. By optimizing credit card rewards and strategically redeeming points, clients can enhance their financial benefits without compromising their passions.

“Use points on partners like Hyatt... get three or four cents per point.” ([51:55])

Simonson also advises against hoarding points due to inflation in reward programs, encouraging clients to utilize points flexibly to maximize their value.

“Stay flexible to jump on a deal when they come would be probably more of a priority now than ever before.” ([54:45])

Conclusion

Eric Simonson's advocacy for the flat-fee, advice-only financial planning model presents a compelling alternative to traditional AUM-based services. By prioritizing ethics, transparency, and client-centric strategies, Abundo Wealth and the Advice Only Network are reshaping how financial advice is delivered and consumed. This model not only aligns better with modern clients' preferences but also fosters more sustainable and trust-based advisor-client relationships.

Notable Quotes:

• “We only give advice. You know, we're not selling products, we're not taking custody.” ([01:41])

• “If they're recommending, hey, go get life insurance, they really truly want you to have that because they're not making a commission on that.” ([04:54])

• “We have clients in over 40 states... Most advice only advisors are almost entirely virtual.” ([21:21])

• “The best hedge against inflation long term has been the stock market.” ([47:59])

This episode underscores the growing demand for ethical, transparent financial advice and the potential of flat-fee models to meet diverse client needs in an evolving financial landscape.