Rapid City Financial Advisor Rick Kahler: Consider the differences. Is financial planning a career, a job, or a calling?

Is the work you do to make a living a job, a career, or a calling? Recognizing the difference can pay you great dividends in many ways.

A job is a paid position of regular employment that puts bread on the table but doesn’t necessarily provide a lot of satisfaction or joy. The song “Take This Job and Shove It” embodies common attitudes about jobs.

A career is a more holistic and long-term concept that encompasses your entire professional journey rather than a specific job or jobs. A career usually requires more investment in training for work in a particular technical or professional field. Not everyone that has a career, however, views it as a calling.

A calling is what makes you feel fully alive, that gives your life meaning, passion, and purpose. It is something that you feel drawn to and uniquely qualified for, that you deeply believe in, and that provides a sense of fulfillment. It’s often something that is so rewarding a person would do it for free. In fact, people often do, earning their livelihood at a job or career and finding their calling in meaningful hobbies or volunteer work.

Helping clients find ways to pursue their calling (illustrated by a tool of the trade pictured above from a public domain image in wikimedia commons) is one aspect of comprehensive financial life planning. Does it matter to you as a client, then, whether your financial advisor has a job, a career, or a calling? It may.

In the world of financial life planning, the distinction between those who consider their work a calling and those who view it as a career or a job has a correlation to the culture and compensation models of fee-only and fee-based financial planning firms.

Fee-only financial life planners provide holistic financial guidance and are compensated solely through client fees, whether by hourly rates, flat fees, or a percentage of assets under management (AUM). They are required to maintain a fiduciary standard that puts clients’ best interests ahead of their own. They openly disclose their fees and potential conflicts of interest, ensuring that clients receive unbiased advice that is not influenced by commissions or product sales.

Fee-based financial planners receive compensation from both client fees and commissions from financial products they recommend or sell. This dual compensation structure can potentially create conflicts of interest depending on what percentage of gross revenue comes from commissions.

Advisors at fee-only financial life planning firms often earn less than fee-based financial planning firms, for two reasons. First, their income is directly tied to client fees instead of the more lucrative sale of products. Fees charged to clients are very obvious while commissions on financial products are usually obscure and out of sight. Second, providing personalized financial life planning services often requires working with a smaller client base. Because fee-based firms earn much more money, they are widely known in the profession for being able to pay higher salaries, often 50% to 200% more, than fee-only firms.

This difference is a key aspect of why fee-only life planning is seen as a calling. The commitment to providing advice without personal financial gain at the forefront demonstrates many fee-only advisors’ dedication to clients. Their calling is rooted in being an advocate for their clients' best interests, transparency, integrity, and unbiased advice. They are willing to make the trade-off of lower profit margins and income potential for the fulfillment and satisfaction they gain from advocating for and making a difference in the lives of their clients.

If one of your aspirations is to use your financial resources to pursue your calling and live with meaning, you may want to consider choosing a financial advisor who holds that same sense of purpose in practicing their own profession.

Rick Kahler, CFP, is a fee-only financial planner and financial therapist with a nationwide practice, Kahler Financial Group, based in Rapid City. His co-authored books include Coupleship Inc. and The Financial Wisdom of Ebenezer Scrooge.