At some point in your life, you will need help with your personal finances, alive or dead. It’s hard to ask for help but even harder to ask when it involves money. It’s better to ask when you’re still alive.
There is misconception about financial advisors / planners. It is fueled by a mix of limited knowledge of what they do, the perception of advisors as salespeople, and a general lack of understanding of the various services they offer. Unfortunately, these misconceptions can discourage some from seeking valuable financial advice and planning when they truly need it.
When you might consider engaging a financial advisor / planner.
If you inherit a large sum of money whether it be cash, an IRA, a 401(k) or other brokerage account or property. Understanding the long-term implications of what you decide to do with it is crucial, especially from a tax perspective.
If you want a professional to manage your investments and financial plan for you since you have limited time and knowledge to properly do this.
If you want help building a well-balanced investment portfolio and financial plan that offers the right combination of risk and reward for you to meet your personal goals and eventual pivot to doing something different (retirement.)
If you are an emotional investor reactive to downfalls or risk averse and need help riding the roller coaster of volatility to keep you invested and on the right track.
If you need help making life-altering decisions and the plans to execute them as best you can.
If you want to have your financial situation reviewed for a second opinion to your calculations, to make sure you’ll be alright. The planner can run their model with your numbers and assumptions and then offer advice for optimization and action items.
Where should you begin finding a financial advisor / planner?
Without having to qualify elsewhere for the minimum dollar amount of assets needed for the financial advisor / planner to invest in order to receive their services, try these options first.
Your 401(k), 403(b), etc. provider may offer financial advising and planning services since your company has paid fees to provide this benefit to you, especially if your balance is over a certain threshold.
Your brokerage account from investing in index funds or from rolling over a 401(k) account. Many of the brokerage firms also offer financial advising and planning when you have invested asset balances with them.
Your work or local credit union.
Your parent’s financial advisor / planner, as you may someday inherit some of their assets.
Other references to consider:
Your CPA or estate planning attorney
Friends and other family but here’s where information becomes more guarded
Search platforms
Flat-Fee Financial Advisor – XY Financial Planning
Financial Advisors & Planning Professionals | CFP – Let’s Make a Plan
Find a CERTIFIED FINANCIAL PLANNER™ Professional or Advisor | PlannerSearch
Home – Garrett Planning Network
LinkedIn / Podcasts / Blogs / Other online forums – one of the best ways to get to know people you’ve never met.
How to vet a potential financial advisor / planner.
Ask for an introductory video call to get to know them, not just their firm’s website, before any significant time or money is invested with them.
10 Key Questions To Ask a Prospective Financial Advisor
Run a free background check if needed.
BrokerCheck – Find a broker, investment or financial advisor
IAPD – Investment Adviser Public Disclosure – Homepage
What are typical fees charged?
Assets Under Management (AUM) Fee: 1% – 2% annually
Flat Fees (Retainer): $2,000 – $7,500 annually
Hourly Fees: $200 – $400 per hour
Per Plan Fees: $1,000 – $3,000
What you should expect from a financial advisor / planner.
High quality communication
In how they respond to you and your questions
In modern-day plain English
In whichever format you prefer that is timely
Proactive to your needs not reactive
Transparency is paramount in what they say and present or show you
Including all fees charged to you
And how their process works for the services you are seeking
Intellectually honest
You feel respected and understood
That a true relationship could be built and not just a transactional one
They offer suggestions to consider, not what to buy and sell
They consider various scenarios, not an absolute one
Personalized to your needs and wants
A secure system to exchange files
Whether it be a secured e-mail or portal
High quality, concise reporting in a realistic format, not 100’s of pages
Access to secure digital financial tools
To change inputs and run different scenarios yourself
What else can they potentially help you with?
Review your compensation packages
Help you research and negotiate a higher salary
Share case studies of families like yours from their other clients
Speak with your kids on what colleges or majors they should consider
Navigate that side hustle into a lifestyle business
Hold your hand through the planning and purchasing of that new home
Build a tax strategy behind your commission checks
Discuss the implications of your equity compensation
Help you navigate the tough realities of aging parents
Talk through your financial upbringing & unpacking any money trauma / habits you saw growing up.
Give both partners a safe space to share their fears & dreams, as well as ask questions surrounding money.
Understand the trade-offs of financial decisions and actions to balance living a good life today and in the future.
From my experience, I completely agree with this assessment. Fidelity, by far, offered us what we were seeking especially in a digital financial model that we can access and modify. Given we have substantial assets under management with them and as an employee benefit, their algorithm to match us with a highly qualified and relatable financial planner is notable. While Charles Schwab is accurately categorized for beginners, it is where they compete. So, evaluate these options with this in mind. They still may mention certain financial products to include in your portfolio, but you have every right to say no.
Engaging a financial advisor / planner is a personal choice and will depend on your financial situation and circumstances. We all have a degree of tunnel vision with our money where mistakes happen. Having a financial professional to engage ideas with or someone to offer a scenario you hadn’t considered may be well worth it or at least give you peace of mind in your independent financial decision-making.
Other resources used:
(3) Why Your Brand Experience Matters More Than Your Portfolio | LinkedIn