How to Pick a Financial Planner
“Never completely trust any trusted advisor.” — Allan S. Roth
A few years back Jeanine started using my financial planner. Our advisor is a SmithBarney Certified Financial Planner that I met during a gay business seminar while living in Atlanta ten years ago. She’s not gay, but gay-friendly which is important to me and I’ve been very satisfied with her services over the years. Jeanine has been a bit more skeptical.
My school of thought has always been to manage the money manager. I think Jeanine wants a little more interaction when it comes to the “advice” part and is much more inquisitive about her monthly portfolio statements. When Jeanine has a question, I always suggest that she pick up the phone and call her. I like our advisor’s style. She’s been at it long enough that she has assistants and an admin and what appears to be staff, but… she always personally and quickly replies to my email inquiries with thorough answers. This is a huge benefit in my opinion and a “just the facts ma’am” style that I appreciate. Because of the nature of my career, I’m much more comfortable operating in a virtual and long distance world.
Jeanine wants a little more hand holding and perhaps might be happier working with the branch manager of the local Edward Jones office… a place where she could stop in and chat about her questions and long-term goals. What about our long-term goals? Well, as long as the end-game aligns, then do we really need to be using the same advisor? Our money is separate aside from our real estate holdings so why shouldn’t she go find an advisor more suited to her style and needs?
Where would she begin? Jane Bryant Quinn at Newsweek writes, “Financial planning is hot. The more people worry about their money, the more they look for experts to help them straighten things out. Supply is rising to meet demand. The planning process attracts not only young graduates and financial professionals, but a slew of career changers”business people, teachers with a knack for numbers and retirees. Certified financial planners number 50,377 today, up almost 40 percent in the past five years – and that’s just the serious side of the field. So how do you weed through the field and pick the right advisor?
Marketplace Money from American Public Media ran this interview with Chris Farrell about what qualities to look for in your financial advisor. Here are his 5 quick tips:
1. Consider the Certified Financial Planner designation. (This 10-hour certification exam tests their ability to apply financial planning knowledge to client situations and confirms that they have the required experience and educational credits.)
2. Find out how long they have been in business. (This is an indication of their commitment and their ability to sustain themselves.)
3. A financial planner should educate as well as advise.
4. Try to plan your future, not just finances. Keep in mind: “Financial planners are futuristic, accountants are historians, and attorneys are draftsmen.”
5. Avoid someone who only talks about money.
Allan S. Roth from Dare to be Dull (a great name for a financial planning site) suggests that, “Whether your advisor is in financial planning or any other field, always ask yourself what’s in it for him (or her). Healthy skepticism will help protect your interests.” Suze Orman also offers her Five Questions for Grilling a Potential Financial Planner.
The Financial Planning Association gives some worthy tips about how to find the right advisor as well as an explanation about how financial planners charge: Important point and worth clicking over to understand.
They also have this handy Planner Search tool. For the LGBT community, there is PridePlanners, an organization of financial, tax, insurance, and estate planning professionals who service our community as well as non-traditional couples and families.
And finally, before you meet with a financial planner for the first time, Errold F. Moody, the author of No Nonsense Finance created this extensive questionnaire. He writes, “This form is more extensive and intensive than what you would normally see from other planners. But if, as a client, you don’t know what is going on or where all your assets are (or you won’t take the time to figure it out), don’t expect much from your planner.”
As I said before: manage your money manager! And you’re more likely to be satisfied with the relationships and results.
This article is continued here!
How do you decide whether you need a financial planner?
Nina,
I am a CFP. I read this blog entry and was very impressed. You have certainly done your research! All too often I see blog entries on how to pick a planner and there is an obvious bias to the author’s belief. I appreciate how well you describe a process than anyone can follow without influencing your own bias.
For years I have explained to my clients the difference between a planner and an account has to do with timeframe. I tell them that a planner helps you understand the potential of decisions you have yet to make, and an account tells you the impact of the decisions you have already made.
I love the quote “Financial planners are futuristic, accountants are historians, and attorneys are draftsmen.” Who said it? May I use it?
Great post, Nina! And I second Balfour’s request — how do you know when you need a planner?
Hmmm… “How do you know when you need a planner?”
That sounds like a good idea for a follow up post. I’ll work on that for next week!
Just wondering is there is a list of “friendly” financial planner?
In this week’s Carnival of Debt Reduction:
http://askmrcreditcard.com/creditcardblog/79th-carnival-of-debt-reduction/
I appreciate the mention in this outstanding column.