The financial professional and financial planning firm you pick to manage your assets and advise you on key financial decisions can affect your retirement and other major financial goals more, maybe, than even you. So it’s imperative that you make an appropriate choice for you and your family.
When trying to find a financial professional and financial planning firm, you may ask your attorney or accountant for a referral. Makes sense, as you most likely trust their advice.
Just as important, attorneys and accountants often cross-pollinate with the financial professionals of many clients, so often they know a variety of these professionals and who might be suitable to work with you.
Asking people you trust ranks high on the list of steps to finding a financial professional that suits your goals. Your vetting shouldn’t end there, though. Here are five more tips to consider when searching for a financial professional and a financial planning firm.
Financial Planning vs. Investing
What type of financial professional do you want? Are you looking for someone to just manage your investments or do you want more comprehensive financial planning?
Some financial professionals integrate tax, estate and retirement planning into services, as well as investment management. And while you might think investing and financial planning are the same – they’re not. Look at it this way: anyone can be an investor; very few people can be financial professionals.
Start with a Simple Google Search
There are many annual lists that provide the names of some of the biggest and best financial professionals and planning firms in the industry. Some even allow you to filter for professionals close to where you live.
In fact, you’d be surprised at the number of results you’ll find when you google “top financial professional lists.” Many of these lists rank professionals to arrive at a “best-of-the-best” list, but just remember: there is no ideal ranking system because each list is compiled with different criteria.
So while such lists are not perfect, they can be good places to start.
Review Websites and Social Media
While websites and social media are ultimately marketing tools, they can also be quite useful to see how well prospective financial professionals communicate with clients.
Do they use financial jargon or explain financial concepts in plain English? Clearly explain services and how they work with clients? Does the overall presentation on their site stand out in some way?
What does your gut say?
Ask About Compensation
You need to know how any financial professional you might engage makes their money. Does their advice depend on your best interest or on a potentially hefty commission? You may not immediately spot some fees and commissions, so it’s important to ask.
Generally, there are three types of financial professionals:
- Fee-only: These fiduciaries don’t earn commissions or other fees on the investments they recommend. Instead they charge an annual fee, typically a percentage of the assets they manage for you, a flat fee for services or sometimes both.
- Registered representatives: The term “stockbroker” is not used much anymore, but registered reps can earn commissions on investments or insurance products they recommend. They are not fiduciaries, meaning they only need to recommend investments suitable for you, whereas fiduciaries must act exclusively in your best interest.
- Independent or dually registered: These planners can charge a fee for managing assets and make commissions on investment or insurance products they recommend. Ask what commissions they receive and if they receive rebates from mutual fund companies in the form of marketing fees.
The First Meeting is Critical
You learn much more about a financial professional during that first meeting (hopefully in-person, but a zoom call can work too). Do they ask questions to better understand what you want from a planning relationship? Do they follow a pre-determined agenda or presentation or are they interested in knowing what’s important to you?
When you do meet with a potential financial professional, make sure you come prepared with questions. You might want to know how often they will communicate with you and how, as well as how they develop investment strategies or what expertise they have in tax or estate planning.
It Could be Your Biggest Decision to Make
Your choice of a financial professional can affect the quality of your money decisions.
Follow these suggestions and carefully vet financial professionals and their firms and you may be well on your way to finding a financial professional for you and your family.
Important Disclosures
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security.
This article was prepared by FMeX.
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