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What should I expect from a financial planner?

My wife and I have decided to go to a financial planner to make sure everything is squared away. neither of us is sure what we should realistically be expecting from this. Is there anything that will clue us in to whether or not it's a good fit between us and the planner?

Jun 28, 2012 by Derek from Virginia Beach, VA in  |  Flag
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4 votes

To avoid being disappointed you really should have an idea of what you want the adviser to do for you. It also depends on the type of adviser you will be meeting. Some advisers sell investments. Others sell insurance. Some do both. Some will manage money. Some will do nuts-and-bolts planning with all sorts of number crunching.

A good resource of what the differences are in types of advisers, their designations and questions to ask as part of your due diligence can be found through the Financial Planning Association's consumer education site found at www.fpanet.org. You'll find a tab on the right "Financial Planning 101" that may provide you with some guidance. Under the "Find a Planner" tab you'll find a link to a checklist with the types of due diligence questions that you may want to use.

To find out if the planner is a good fit, consider asking about his approach to planning. Some advisers only do investing. Others will offer investing services but only after having completed a plan for a client. Most who do the latter here share the belief that you should have a road map to know where you're going before you go off and start throwing money around in the investing pool.

You can also ask about their investment approach and philosophy. Ask about how they charge (remember nothing is free so use the answers here to determine if there are any potential conflicts of interest). Are they acting as a fiduciary?

Regardless of the question, drill down deep by asking "Why." Why do they invest that way? Why do they charge that way? Why do they do what they do?

Armed with these questions and your own, you'll have a good idea about the type of adviser you'll be working with now and hopefully for a long time to come.

2 Comments   |  Flag   |  Jun 28, 2012 from Amesbury, MA
Steve Stanganelli CFP®, CRPC®

I came across this article in Forbes noting two questions to ask your financial advisor. I usually use these questions when speaking with potential clients. And granted, they do focus on investing as opposed to financial planning but they are worth adding to the list. Just remember that financial planning and a financial adviser are more than just investing and performance.

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Flag |  Jun 28, 2012 near Amesbury, MA
Steve Stanganelli CFP®, CRPC®

Link to Forbes article: http://www.forbes.com/sites/financialfinesse/2012/06/28/two-questions-no-one-ever-asks-their-financial-advisor-but-needs-to/?goback=.gde_114362_member_128916224.

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Flag |  Jun 28, 2012 near Amesbury, MA

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4 votes

Hi Derek, first and foremost you should expect to have your interests come first. You should also expect a high degree of transparency, meaning no conflicts of interest (or if there are any potential conflicts, they should be fully disclosed to you and understood by you). You should also expect to pay a fair price for the advice you receive.

The CFP Board, which regulates Certified Financial Planners, has a short interview checklist you might be interested in; check it out at http://www.cfp.net/learn/knowledgebase.asp?id=8 .

Once you find a good advisor, I think you'll know you have a good fit when you have peace of mind about your decisions and feel like you really understand what actions the advisor suggests, and why those specific actions make sense for your unique situation. A good advisor will welcome all of your questions patiently!

Mike

1 Comment   |  Flag   |  Jun 28, 2012 from Orland, IN
Michael L. Wilson, MBA, CFP®, CRC®

And here's one more list of questions along with some explanations from a law professor at Boston University--just ran across this again today! http://fsp.bc.edu/how-to-grill-your-stockbroker/

Flag |  Jun 28, 2012 near Orland, IN

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3 votes

I'll echo comments about fee only vs product selling; and, ask if they will accept fiducuary status - in writing - for all their work; not just the planning, but the implementation as well.

I might add this: Listen to what your candidate is saying. If your candidate is selling 'returns' or an investment process, s/he may be more focused on revenue-generation than your own best interests. A good candidate will ask a lot of questions about the two of you: Who you are; how you feel about money; where you are and where you want to be; your attitudes about managing money, as well as your fears, hopes, and desires. A good advisor will help you do what YOU would do if you had all of his/her time, education, training, and tools. It's about you... not the advisor.

Avoid asking questions like, "What kind of return do you get for your clients?" That will send a signal to the 'bad' advisor that you're simply shopping for returns (Bernie made a lot of money having the right answer). The fact is an 85 year-old widow has different needs than a 45-year-old professional; and advisors tailor their work to client needs. Good luck!

Comment   |  Flag   |  Jun 28, 2012 from Moorpark, CA

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Derek, This may be a long answer, but I think you will get the point:

Helping Clients control their emotions Performing due diligence on a wide variety of products Assisting clients with a financial plan that can change with a car accident, a death, a birth, a marriage, a divorce, or myriad other things. Keeping clients “balanced, yet flexible” in response to constantly changing markets Educating clients about opportunities and risks Motivating clients to make difficult decisions Talking through trade-offs Allowing clients to review consequences under various scenarios- visualizing eventualities Staying current on industry trends so that they don’t have to. Vetting hundreds of investment and borrowing options and presenting a digestible set of recommendations Deliver accountability and accept responsibility that no one else wants to take Dealing with complexity Minimizing paperwork Helping clients really know what they own Setting and re-setting realistic expectations Explaining money and wealth to a family Helping spouses align their expectations Revealing the real fees and costs to financial products Overcoming client procrastination Helping business owners create wealth uncorrelated with their day-to-day business Helping highly skilled professionals (lawyers, doctors, executives, business owners) enjoy liquidity earlier in their lives. Considering the home country bias in investing Contemplate currency effects and hedging according to where clients need to spend money Collateralizing debt against securities, thereby liberating more wealth to invest. Spotting the real risk, possible blow ups, that could hit a family finances. Helping clients to know what they can comfortably spend. (Budgeting) Allow clients to admit that they don’t understand financial markets, and educating them accordingly. Deciding whether managed money or discretionary stock picking is better suited for a client. Advocate on behalf of clients interest.

Good Luck Dan

Comment   |  Flag   |  Jun 29, 2012 from Asbury Park, NJ

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