Well before job losses and furloughs due to the downturn, many Americans were in tenuous financial shape as they approached retirement .

The current economic crisis appears to be making that situation worse. According to a May survey by financial technology firm SimplyWise, 20% of respondents said they would likely make withdrawals from their 401(k) accounts sooner rather than later. The survey of 1,070 Americans also found that one in three saved nothing for retirement in the past year.

While there is a perception that financial planners can help all Americans prepare for retirement, that's not always true.

For starters, a comprehensive plan can cost upward of $1,500. Often, it costs much more. That locks out many people who want help but can't afford the fee.

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Practice Management: Financial Planning

Planning can also be a tricky business model for advisors. A comprehensive plan entails much more than a budget or investment strategy. Instead, it includes a deep dive into assets, insurance, estate planning, portfolio withdrawal rates, future income, retirement strategies and much more.

For advisors, much of the revenue from planning is a one-off; advisors need to constantly market to bring in new planning clients, or to encourage repeat business. Despite a fee that sounds high, margins for advisors can be low, given the hours they put into creating a plan.

For those reasons, many advisors start out doing planning only but eventually turn to managing assets, where recurring revenue offers more opportunity to grow a stable and sustainable business.

But even for that model to be economically viable, advisors often need to focus on clients with investable assets at a certain level, often $500,000 or $1 million. Otherwise, the revenue may be too low, relative to the hours spent on client projects.

These minimums shut out many Americans who do not have a high level of investable assets.

Don McDonald, principal and education director at Vestory in Bellevue, Washington, says his firm has tried for years to identify a model that would include investors with fewer assets .

"There is no good business model right now," he says. "We have tried robo offerings, but it's a challenging arena in which to market, and the work was far too difficult for too little revenue. So, we adopted a hybrid approach thanks to our radio show, podcast and blog. We give out a lot of simple advice, free, via our media."

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The firm makes its r isk tolerance quiz available for free and steers respondents to diversified Vanguard index fund portfolios.

The firm also offers advisors' time to help with single-issue questions that require a deeper dive than is possible on a radio show.

"We have found that a true giveaway model works because it endears us to our listeners and readers, and they are more likely to suggest us to their friends. Also, we provide free, ongoing advice to our clients' children and grandchildren. That's just smart long-term business," McDonald says.

Most Americans own too few assets to catch the attention of traditional advisors. These underserved clients may include younger adults, people of color, women or those who, for whatever reasons, were not able to save much for retirement.

Pro Bono Solutions

Frank Paré, founder and president at PF Wealth Management in Oakland, California, says that for some who want financial advice, but who are low income or have few or no assets to manage, "pro bono might be the best solution. It should not be a financial burden to pay for financial advice. "

Georgia Bruggeman, the founder of Meridian Financial Advisors in Holliston, Massachusetts, also says advisors can offer pro bono services.

"So many people lack financial literacy," she says. "Many do not even know about basic tools such as 529 accounts or automatic saving and the importance of emergency funds. How many laid-off workers have we read about that are one paycheck away from being broke? Most have basic questions and need to know where to turn."

She also says advisors can offer hourly or discounted rates for lower-income customers.

"This cannot be a high percentage of your business obviously. Maybe allocate one day a month or a certain number of hours," she says. "Any questions that are higher level, such as what securities to buy, estate planning or complex tax planning, would not be part of the service."

But pro bono isn't the only option to serve those who want help, but don't have the requisite assets.

Innovative Solutions

Hilary Hendershott, the owner of Hendershott Wealth Management in San Jose, California, wanted a way to serve clients who were just getting started with investing. She created a program called Ignite Investing as an option for those with account sizes between $25,000 and $499,000.

To make it scalable, every client in the program has the same investment portfolio .

"We offer them one planning meeting per year, and they get every bit of the comprehensive experience of our high-net-worth clients," Hendershott says. "The program itself is not hugely profitable, but it's in line with the mission and vision I have for my firm, so I invest in it."

In the broader sense, Hendershott believes planning and portfolio management, combined, serve clients better than a one-off or a once-a-year planning session.

"Comprehensive planning, which includes investment portfolio management, is the best and most effective way for clients to engage with a planner," she says. "After all, if you only meet with them once a year and simply make recommendations about investments, what's going to stop the client from derailing plans by making poor moves midyear?"

Other advisors are also figuring out ways of serving those who typically aren't able to get professional financial help.

Matt Fox founded Ithaca Wealth Management, an independent registered investment advisory firm in Ithaca, New York, to provide services to a range of clients.

"I wanted to offer quality financial advice to anyone who needed it, regardless of what stage they're at in life," he says. "I previously worked at a $4 billion wealth management firm, and it struck me that we had a $250,000 minimum. I understand the profit motive behind the move, but that, along with relatively high management fees, didn't sit well with me."

Fox requires no minimum account size for assets under management, and his fees begin at less than 1% of the assets he's managing. For custody of the assets, Fox uses a relatively new online platform called Altruist, designed especially for independent RIA firms.

He calls Altruist "a one-stop-shop for trading, portfolio management, performance reporting and billing. Costs are drastically reduced, as I don't need a slew of software programs to service my clients, and I'm able to pass those cost savings onto my clients.

"I want to democratize financial advice and help educate and empower younger investors to take advantage of compound interest," he adds.

Fox has a long-term view about his firm's profitability, focusing on smaller clients. He says young professionals with less than $20,000 to invest today may have more assets as they advance in their careers.

"It's a form of building serious trust with my clients, as well as a lifelong client-advisor relationship. And the potential for referrals along the way is enormous," he says.

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Structure Client Engagement

Dejan Ilijevski, president of Sabela Capital Markets in Munster, Indiana, says clients with fewer assets may need the most help.

"Most clients are seeking advice on their $10,000 to $20,000 (individual retirement) account, or how to choose appropriate investments for their 401(k) or 403(b)," he says.

Many clients with smaller accounts end up with commissioned brokers, rather than a fee-only RIA with a fiduciary duty to put clients' interests first.

"Unfortunately, I see a lot of these clients who end up with expensive investment and insurance products that drain their wealth over time," Ilijevski says.

Ilijevski says most people with small investment accounts don't need a comprehensive financial plan.

"Paying thousands of dollars for one wouldn't be in their best interest," he says. "It just wouldn't make sense. Indeed, a 30-page comprehensive financial plan ends up in the trash by most clients anyway after they look at it once. And it's only a snapshot. If markets or cash flows change drastically, the plan, in many cases, is useless."

Instead, he believes people with fewer assets should begin with an investment strategy.

"The best way to help these clients is to get them started investing properly with a diversified portfolio of low-cost index funds, or exchange-traded funds, that matches their risk tolerance," he says. "For these clients, minimizing their costs while diversifying their holdings is the best value that you can provide. The value from this will be long-lasting."

Ilijevski also suggests new ways to structure client engagements. Typically, if a client signs on with an advisor, the relationship lasts until one party terminates the arrangement. Frequently, these relationships last for years and even extend to the next generation.

Ilijevski says other models can work. He cites an example of a six-month client engagement.

"Initially, you help with their investments — what to choose in their 401(k) or 403(b), review their current IRA accounts and help them roll over to Vanguard or another low-cost provider," he says.

"Then, over the six months, they can get in touch if they have any questions about their investments. At this point it's mostly behavioral finance," he says, referring to the phenomenon of investor psychology affecting financial outcomes.

"There would have to be inherent boundaries so that the client doesn't take advantage of the relationship, like the expected maximum number of hours over the six months," Ilijevski says.

That may require some trial and error on the part of the advisor.

"If more than a few hours, it starts to diminish the model. There have been clients with whom I've spent 10 hours using this model," he says. "Obviously, if you spend that much time with all of these clients, you wouldn't be in business for long."

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