Hiring a financial planner is an incredibly personal - and important - decision. This is someone who will be perusing the intimate details of your financial life, and could potentially hold your future retirement success in their hands. Most experts agree that anyone would benefit from working with a financial planner, no matter their level of income. However not all financial planners will be a good fit for you. Before you start working with a financial professional, it's a good idea to ask them these five questions:
1. Do you have experience working with others in my life situation?
Your financial planner isn't there to judge you, their job is to help you make the best of any financial situation. This could mean helping you bail out from a bankruptcy, developing a new plan now that you are divorced, or figuring out how to retire early. Finding a financial professional that has experience working with other clients similar to you, with a comparable attitude towards risk and similar needs, is a good first step.
2. What kind of training do you have?
Understanding the advisor's real world experience coupled with their training can help you determine whether the advisor has the skills to advise you properly. How many years of experience do they have? Credentials are also important in some respects. However, be wary of credentials that may seem impressive but may only require a short amount of study time without any legitimate exam. There are certainly plenty of those types of credentials out there. Also, what kind of continuing education do they currently do, and do they surround themselves with other advisors to learn from?
3. Are you willing to sign binding fiduciary and non-disclosure agreements?
A fiduciary agreement, also known as being held to a fiduciary standard, means that your financial planning professional is required to place your interests above their own -- even when it means they make less money on a trade or sale. Surprisingly, a small minority of financial advisors operate under the fiduciary agreement under all circumstances. Non-disclosure agreements are especially important for high net worth individuals, as this reinforces the standards of privacy required for anyone handling your personal and financial information. Note that merely because an advisor may say they act as a fiduciary, confirm that they act as a fiduciary throughout the planning and investment advice stages. There are organizations that are solely comprised of fee-only fiduciary planners. The Alliance of Comprehensive Planners ("ACP") is one such organization and boasts several financial planners in the Florida area and throughout the nation. As a member of ACP, I am proud to represent Oasis Wealth Planning by being a part of this organization that provides additional resources in a tight-knit community comprised of ethical and highly competent advisors.
4. How are you compensated for helping me?
Financial planners are often making money from a variety of sources: direct hourly or flat-fee payments from clients for managing financial interests and a percentage or fee for trades. It's important to know exactly how your advisor is compensated before you make a final decision (but it's important to remember that you often get what you pay for)! Question whether there are incentives in place that may bias what the advisor may recommend (or, perhaps "sell").
5. Tell me about a client's success
Talking through client scenarios may help you understand the value that a particular advisor can provide. If the advisor merely talks through the returns or picking the best stock, this might not be the advisor for you. If the advisor is short on detail but long on slick talk, this might not be the advisor for you.
Working with the right financial planner with the experience and multi-disciplined background should shed light on many financial factors you had not considered. You may learn more about financial principles or effective strategies that can allow you to meet your goals more readily – or simply get a plan in place that leaves you feeling more comfortable about your future.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as investment, tax, or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.