What Do You Need to Know Before Working with a Financial Planner?
I really wanted to use this show as a way to update my article: “Five Tips to Consider Before Choosing an Advisor”. As an industry insider and one that has a concern for those that consume financial services, there are things you should know before working with a financial planner/advisor/professional.
Some of this has been covered previously through the above-referenced article and Episode 10-“Putting the Serve Back into Financial Services”, however, after recently giving a talk at a conference about this subject I felt I should update “the list”.
Questions/Issues We’ll Address on this Episode:
The 5 Areas of Greatest Concern:
Experience (Qualfications, Education, Specialty, Etc.) – (7:47)
Let’s talk experience. Now I covered in a previous episode (“The Low Down on Financial Advisor Credentials”) some of the more popular professional designations. I’m going to stick with what I’ve said before that you want someone that has been working with clients for at least 5 years especially if they have their own firm. If it is a larger firm obviously the collective experience will probably exceed that. But you may also want to look for a specific expertise. What is your particular pain point? Why do you want their help? Ask them specifically how they have helped people in your shoes. This will get them talking about their experience and their service offering which should give you some answers
Fiduciary Role (Ethics, Conflicts of Interest, Etc.) -(12:55)
I think the first and foremost is making sure your advisor is a fiduciary. I actually spoke with a prospective client the other day and he actually referenced this term. He asked about my pay structure and how I’m compensated. I applauded his level of knowledge because most individuals working with an advisor don’t even know how their advisor is paid. And if you don’t know how they’re paid you don’t know if his or hers interest are aligned with yours. So make sure they adhere to a fiduciary standard and are looking to serve client interests before their own.
Method of Compensation (commission-based vs fee-based) -(15:00)
Method of Service Delivery (financial plan, IPS) – (18:45)
The “Sniff” Test – (21:25)
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