Helping You Avoid Life's Financial Mistakes

How To Hire The Right Financial Planner?

November 14, 2008 By 1 Comment

Do you have a financial planner? 

When I was in financial services a common question I would ask people are, “Do you have a financial planner?”

With most people this would be a resounding NO, some aren’t sure and about 5% of my clients had a financial planner.  But what was even more astounding was when I asked them, “When was the last time they had talked to them?”  I got the usual blank stare with a guess that they weren’t even sure about. 

So in this post I hope to give you some tips on what to look for in a financial planner as well as what questions you should be asking when your looking for one to help you out.

What your financial planner should do for you.

In the previous post in this series I talked about things that you should watch out for when talking to financial planners.  Here are things you should be looking for.

  • Look for a financial planner who does financial plans for FREE.  This may be a bit harder than it seems but some financial planners will charge anywhere form $250 to $2500 or more to put a plan together for you.  Personally I can’t see why someone should charge that kind of fee to you just to repeat the same information back to you.  There are planner who will do it for free you just have to look for them.  When I was in financial services I did every one of my plans for free. 
  • Should be a great listener.  The point a financial planner is to listen to you and provide solutions based on your financial problems.  However I have seen many planner skip right past this and push a product.  You will be able to tell who is a good listener and who is not.  A good listeners will ask mostly questions and the others will have a bad case of diarrhea of the mouth were they won’t even let you get a word in.  If you have a planner like this turn around and run in the other direction NOW.  They aren’t  interested in helping you in your situation.   
  • Should look professional.  You would think this would just be common sense but you wouldn’t believe how many don’t do this.  In financial services I mostly wore a suit but in certain cases dressed business casual.  If they come in wearing ripped up jeans and cutoffs this may not be someone you can’t trust.  A professional look does more than give a good appearance it shows trust that they are professional and knowledgeable.
  • Does in-person annual reviews.  This is a big one.  Not one client I ever had had a planner who did annual reviews of there finances.  When I was in financial services I not only did annual reviews but I did them in person at the client kitchen table.  Talk about service.
  • Educates you on your finances.  Again you would think that this would be part of the package deal.  Education on your finances is very important to you in making the right decisions.  Financial planners shouldn’t just be pushing a product on you they should be educating you how products work and how they will benefit you.
  • Have a great attitude.  I did this one last because it’s not as common but I have seen it before were they may get a bit unhappy with you for not doing what they want you to do.  Usually the planner should be genuinely interested in you and what you have to say.

Have any other great tips to add to this list?  Add them below in the comments.

What questions should you ask your financial planner?

When asking these questions take it from the point like you are hiring this person to work for you. 

  • How long have they been in financial services?  If they’ve been in financial services for some time this will help because this means they have seen many different financial situations and will be able to come up with a few more ideas.
  • What licenses do they hold?  Your planner should have several licenses so they will be able to design a program for you based on your needs not there licenses.  They should have at least a life and health license, Series 6, Series 63, and possible a series 65.  They may also have a P&C licenses and a CFP ( Certified Financial Planners)  Obviously the more the better.
  • What do they specialize in?  Usually a financial planner will specialize in a certain area.  Maybe it’s investments, or insurance, or advisory services.  Knowing this will allow you find out what there major objective is as a planner.
  • Do they do annual reviews?  Again you know why this is important.  Make sure you don’t forget to ask.  One thing I got in the habit of a lot with my clients was to set an annual review the following year this way it was always set and I never had to worry about forgeting to do this. 
  • What product providers do they work with?  Knowing what product providers they deal with will allow you to research those companies, see what kind of rating they have, and if they are a good company overall. 
  • What are there fees for there service and cost on product they recommend?  Not all planners will charge fees but there will be a cost on the product that you buy.  Be careful of high cost  products.  A good way to check this is to get a second opinion fro another planner.

These are probably some of the bigger questions that I would ask however there may be other you have thought of that I didn’t mention.  Please feel free to list it below in the comments.

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Does Your Financial Planner Have Your Best Interest In Mind?

November 12, 2008 By 7 Comments

Not All Financial Planners Are Fair And Equal.

Do all financial planners have your best interest at heart?  I use to believe this at one time.  I thought they all did the same thing.  It didn’t matter which one you went to they all did the same thing.  Invest your money, set up some insurance policies.

Sound pretty simple right?

From being in financial service for the last 5 years I learned that they all aren’t the same and some don’t have your best interest at heart.  So in this post I would like to point out a few things to watch out for when hiring a financial planner.

What a financial planner is suppose to do.

A financial planners position is to listen to and review your goals and financial concerns for you.  He should take notes of your financial situation and in most case put a financial plan together for you.  His decisions should be based off of your input so he can make the right recommendation for you.

Once he recommends the right product that is specifically suited for your needs he will implement it on your consent.  Now most would believe that this would be the end of there financial planner.  This should only be the beginning.

From this point on your financial planner should be scheduling an annual review for you.  The reason behind this is because no one persons situation ever stays the same.  At the very least they should set up an annual review and if you prefer have them give you a call every 3 to 6 months to make sure things stay in order.

What To Watch Out For.

  • Watch out for those that have the one solution that fixes all.  This is hardly ever the case.  For example maybe you’ve heard the term “BUY TERM AND INVEST THE DIFFERENCE.”  The only thing they can do is set up a term policy and invest your money in a mutual fund.  It don’t matter who it is it’s the same thing over and over again.  You may also see someone promote just one product all the time and that’s it.  One product will not solve everyone’s problems.
  • Watch out for the fast talkers and the hard sellers.  These people have no interest in listening to you.  In fact they see a sucker coming a mile away.  They aren’t interested in educating you or helping.  They will typically just try to talk you into a certain product without letting you get a word in.  They will give you every reason to buy the product and no time to think it over.  Then once you do buy you’ll usually never see them again.
  • Watch out for financial planners who make big promises.  Financial planner should never make promises bigger than they can keep.  In fact if it sounds to good to be true it probably is.  If they make any guarantees telling you’ll get 12% on your account or you’ll get that life insurance policy for sure don’t count on it.  Also if they tell you they’ll give you a gift for buying an investment or policy don’t count on it.  Finally, if they tell you that they will pay for referrals don’t count on it.  The reason I say don’t count on it because they are all illegal to do.
  • Watch out for financial planners with limited licenses.   Planners without proper licenses won’t be able to give you what you may really need.  Instead you’ll get what ever they can do with there current licenses. 
  • Watch out for financial planners who don’t take care of you.  These are usually harder to spot.  They may help you out but seem to enter the witness protection program once you sign on the dotted line never to be seen or heard from again. 

Does Your Financial Planner Have Your Best Interest?

Has your financial planner done some of the things I’ve pointed out above?  Have they done other things to you that I didn’t mention?  Feel free to leave me a comment about it.  I’m sure there are others so I will probably do another article on some of your comments listed.

Now that I’ve gone through all the things you should watch for check out Friday’s post were I will be discussing which financial planner you should hire and why.

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