Tips for Choosing a Financial Planner

Laurie Pawlik-Kienlen | | 0 Comments

Certified Financial Educator Clint Gharib shares tips for choosing and hiring a financial planner, questions to ask a potential investment advisor, and two things you never knew about investment specialists!

“It is important to talk to several planners before selecting one in order to find one with whom you are comfortable,” says Gharib. “Interview financial planners like you would anyone you would hire, whether employee or a contractor.”

For more info on earning more money and investing, click on Financial Planning for the Not-Yet Millionaire by Don Baker. And, read on for Gharib’s tips on choosing a financial planner…

4 Questions to Ask a Potential Financial Planner

How are you compensated? Would you ever hire an employee or contractor and not know what you are paying them? There are several ways financial planners can be compensated: commission only, percentage of assets only or a combination of commission and fee.

Are you an investment advisor, broker or both? In most cases it is preferable to work with a financial professional that is both a broker and advisor. One of the reasons it is important to know whether the planner you are interviewing is an investment advisor, broker or both is because not all products make sense to be charged a commission or a percentage of assets. It is in your best interest to make sure your financial planner has the flexibility to charge a commission when it makes sense and fee based on the percentage of assets managed when it makes sense.

How often do you recommend my portfolio be reviewed? You should have a clear understanding of how often your planner will contact you. I recommend at least quarterly contact to review the performance of your portfolio, to keep your planner up-to-date on any life changes (employment, marriage, divorce, etc.) and to review the current market and make sure your investments are still in balance with achieving your financial goals.

How long have you been with your current firm and how long have you actually been advising clients? A mistake many people make is simply asking how long a planner has been in the business.

4 Mistakes Investors Make When Working With Financial Planners

Investors don’t clearly know how much they are paying annually for all fees and costs.
Investors don’t ask how long the planner has actually been advising clients.
Investors believe if they get references the planner must be good.
Investors don’t clarify their expectations with their planner.

Don’t rely solely on references. An advisor will not have you talk to a current client that is unhappy with their performance so therefore references aren’t objective. Does the advisor take the time to answer your questions in a way you clearly understand? Do they ask you questions about your current lifestyle, financial need, goals and fears?

3 Tips for Working With a Financial Planner

1. Always bring concerns and questions immediately to their attention so you can resolve any issues/concerns and move forward.

2. It is important the planner understands the best way to communicate with you, the best times of the day to talk and how often do you expect to be contacted. If you haven’t heard from your advisor on a quarterly basis proactively contact them.

3. Clearly outline your expectations. Investing your money is as much your responsibility as it is the planners’!

2 Surprising Facts About Financial Planners!

1. Financial planners will take great care when initially setting up an account to optimize their client’s portfolio performance. Some planners, once they’ve designed your portfolio, put too much faith in their initial portfolio allocation and don’t consistently review it. That’s why it is important to proactively communicate with your planner on a regular basis and notify them of major life changes (marriage, births, employment, etc.) so they can review your portfolio and ensure your investment strategy is in alignment with your goals.

2. Many financial planners like it when a client takes an active interest in their portfolio and asks questions because it helps align expectations and becomes more of a partnership.

If you have any questions, thoughts, or tips for financial planners, please comment below!

Clint Gharib is a 20 year veteran of the investment industry; he joined J.P. Turner & Company, LLC in 1998. As an investment advisor and Certified Financial Educator (CFE), Clint’s specialties include asset modeling, retirement planning, insurance products, real estate investments, college savings plans and estate and tax planning.