On top of that, you want someone available, approachable, and pleasant to work with. Those criteria seem like they should be basic, but unfortunately, they eliminate a majority of the options. Typical financial planners often fall short of many of these expectations. Fortunately for you, we are anything but typical.
As a client-focused accounting firm, we are at least as passionate as you are about the need for a good fit between client and financial planner. We’ve been in the accounting industry for more than 30 years. During that time, we’ve learned more than a few things about what to avoid when choosing someone to help you with your financial decisions. Here are the questions we think every client should ask before deciding to work with us, or anyone, on their financial planning:
Do You Provide the Kind of Planning Assistance I Want?
This question starts with determining what you hope to get from financial planning. Until you know that, you won’t be able to effectively narrow down that long list of internet search results. There are different levels of financial planning. What you want determines the kind of assistance you need.
If you just want an overview of how investing works, you can probably get that from a book. There are plenty of great options out there that lay out the basics of equities and investing. None of their explanations or advice will be tailored to your situation, goals, or needs, but they can at least help you understand what investing means.
Depending on the book, you may also glean information on different tax-advantaged accounts or life insurance types. Reading can be a great place to start, but if you want to ensure you are optimizing for your specific situation, books won’t do much for you.
Some companies are now offering virtual financial planning services. These can be okay for quick assessments of simple situations. However, their primary goal is often churning through as many clients as possible. The main finances they are planning for may be their own: how many client fees can they collect in one day? That means they won’t take the time to delve into your life or fully understand your goals. You may end up with “Financial Plan #3 of 4” rather than something customized to your life and needs.
These virtual services can be better than nothing, especially for clients starting from the basics. However, be cautious about taking financial advice from someone with a limited understanding of where you are coming from and where you hope to be. That’s a recipe for missed opportunities and disappointing or even scary results.
For complete, meaningful financial advice, you want an advisor who meets with you in person. However, if that meeting is rushed, the only thing better about it than the virtual services is the complimentary tea or soda you might get offered during your appointment. Look for someone who values your time and wants to spend as much of their own time with you as necessary to understand you.
Details you might not have thought of, like the age at which your spouse plans to retire or whether you hope to travel more in the future, can have cascading effects on your finances. A savvy financial planner knows what to ask to get a complete picture of your needs. An ethical, thorough planner takes the time to delve into your situation and goals. If you feel rushed or like the advice you are getting comes from a script they memorized and recite to every client who walks through their door, find someone else.
Decide what level and type of advice you need and ensure that’s what any potential candidates will provide.
How Do You Get Paid?
There are many different fee structures for financial planning services. If an advisor tells you that you pay no fee for services, that can sound like a good thing. After all, the point of this endeavor is to optimize your finances. What’s more optimal than “free”?
However, the person across the desk from you isn’t working for free. If you aren’t paying them, someone is. And that’s usually the life insurance company, fund manager, or someone else who benefits when you buy their products and services.
When an advisor is paid by commission, they have a vested interest in steering you toward the options that pay them the most. They also make more when you spend more. That means their advice may be aimed at getting the most money out of your pockets rather than making you the most significant gains or aligning your investments with your risk tolerance. Steer clear of these planners.
What you want is a fee-only financial planner. That’s a specific term and means they receive no commission or compensation from anyone but you. Because of that, their loyalty is to you and you alone.
The fee structure for these advisors can vary. Their compensation might be a flat fee, an hourly rate, or a percentage of the assets they manage on your behalf.
Also, inquire about what costs extra and whether there are any additional fees. It’s not always bad to pay for extra services. Just make sure the extras are clear upfront.
Are You a Fiduciary?
“Fiduciary” is a fancy accounting term for “someone looking out for their client’s best interests.” A fiduciary must make recommendations they feel are most appropriate for your financial situation rather than what makes them the most money or takes the least amount of their time.
Not all financial advisors are bound by fiduciary rules. Yes, that means that some people you hire to help with your finances can steer you toward investing in funds that pay them a large commission, or engage in other unethical but legal behavior. They can select any investment or recommendation that seems suitable, rather than one that is in your best interest. Put more simply, as long as they don’t knowingly give bad advice, they are within the law, even if they aren’t giving you what they know is the best advice.
Who Are Your Typical Clients?
If a financial planner is used to working with professional athletes and pop stars, they may be experts at understanding how working in various states and countries works with tax laws. The advice needed by a jet-setting client with a net worth in the 9-figure range differs from that required by a struggling single mother or a closely-held business owner. Look for a financial advisor whose bread-and-butter is dealing with people like you.
You want someone used to advising those with similar goals and clients in similar financial situations. Of course, they should provide individual, tailored advice to each client. But it’s still important to understand whether their expertise lies with people like you.
How Do You Envision the Relationship?
Some financial planners want to do an intensive meeting with minimal follow-up. Others are happy to take your phone call if you have a specific need but won’t reach out unless they want to suggest your plan. Some will reach out frequently to check on you, maintain the relationship, and ensure they are on top of the latest version of your goals and plans.
Find out how much access you will have to any advisor you consider working with. How often will you meet? Will they be available for emails or calls outside those set appointment intervals? How frequently can you expect to hear from them, even if it’s just to chat or check to see how you are feeling about market volatility? No matter how knowledgeable the advisor, you will likely be frustrated, disappointed, and possibly shopping for a new financial planner if you have a different vision for the relationship than they do.
What About Taxes?
Taxes and financial planning go hand-in-hand. Any competent advisor will consider taxes when creating your financial strategy. Which tax-advantaged accounts make the most sense for you? Is a mega backdoor Roth right for you? How will you fund any years between leaving employment and being able to easily access retirement accounts? You can rely on a financial advisor to answer these types of questions for you, even if you didn’t know to ask them.
But what about filing your tax return? In most cases, a financial planner will specialize in providing financial advice, not filing out IRS forms. If you, like most people, find tax filing tedious, overwhelming, and confusing, you’d appreciate help with the filing process. Does your prospective financial advisor work at a firm that has tax preparers available? If that’s a service you value, ensure that any advisor you are considering has a partnership with tax preparers.
Anything else?
We’ve covered the basics, but you don’t need to stop there. If in doubt, ask!
If you want to understand a planner’s perspective on whether the U.S. market’s global reach decreases the need for international stocks, ask. If you need help understanding how a Roth IRA’s tax advantages work in your favor, don’t be shy. No question is too big or too small. If they treat yours like it is, they probably aren’t the right fit. You want someone patient who can meet you where you are with your financial knowledge.
As you can see, finding the right financial advisor is a lot more complex than that simple “financial planning near me” internet search. There are many financial planners in Charlotte, NC. It is worth a little bit more of your time to ask questions and find the right match.
When the partnership is functioning well, your financial planner becomes a partner in managing your investments, explaining risks, considering new strategies, and guiding your financial future. All of those things are important enough that you want to be thoughtful about who you choose.
If you are looking for an atypical advisor who values a relationship with you, respects your time, and understands your needs, BGW might be just what you are looking for. We are an innovative, client-focused firm and would love to answer your financial planning questions.
