Matchmaker, Matchmaker…..Make Me a Financial Planner Match

There often comes a time in my work with my coaching clients when they desire aprofessional analysis of their current financial situation and the need to find a financial planner arises. They are eager for a comprehensive recommendation based on the financial goals and desires they have clarified through Financially Smitten money coaching. Clients then ponder, who am I going to partner with for financial advisement…a CFP…a ChFC…a CPA? How does one find a ‘good match’ amidst this financial alphabet soup? In this article, I share how I walk my clients through this decision making process.

Firstly, it is imperative to be proactive when establishing or engaging in an ongoing relationship with a financial advisor. Consumers must ask the right questions when selecting an advisor, AND they must keep asking questions on a regular basis. This is where awareness leads to empowerment, and being able to make a Financially Smitten-educated choice.

Understanding The Financial Advisement Industry Landscape

The descriptors ‘financial advisor’ and ‘financial planner are often used interchangeable, and are not licensed designations in and of themselves. To aid your search, focus on looking for a CFP [certified financial planner] or a ChFC [chartered financial consultant]. Both of these credentials are nationally recognized certifications that are granted only after completing extensive course work and passing a series of exams.

Financial advisors are compensated in a variety of ways, and it is critical that you understand the differences. Not only are consumers often not aware of the fee structures, it is also an area ripe for confusion. I want to make sure you understand this and have outlined the most popular fee structures you will encounter:

Fee-Only: This can be determined by an hourly rate, a flat fee, or a percentage of net worth or assets under management.
Commission-Only: Compensation is based purely on commissions the advisor earns from the sale of securities, insurance, and/or other products the client purchases through them.
Fee & Commission [also known as 'fee-based']: Advisor compensation is based on a mix of both fee and commission.
Fee Offset: Compensation is based on a flat fee from which commissions are offset. In this case, you need to know what happens if the commissions exceed the fee…is the balance credited back to you?

As you can see, “fee-only” are the only advisors who are not dependent upon a commission, so they are able to be completely unbiased in the advice they provide their clients.

Searching For An Advisor

Prepare for your search by getting clear on what your needs are regarding financial advisement. Some areas might include: specific financial goal setting; cash budgeting/management; tax planning; investment review/planning; estate planning; education funding and/or retirement funding.

Part of deciding what your financial goals are includes deciding how much involvement you want in the process of financial planning and what you are looking for in an advisor. You need to hone in on that first then find advisors who meet your criteria, as different advisors will offer different levels of participation in the process. So, you need to clarify: Do I want a check up? A second opinion? Or someone to completely take the reins and do everything?

Especially if you are looking for an advisor who is going to manage your money on an ongoing basis, you want to get personal referrals. A great place to start the search is to ask for recommendations among your trusted network of friends, family, and colleagues. Another resource is the “Find An Advisor” page on the National Association for Professional Financial Advisors website.

I recommend starting with a list of 3-5 potential advisors. Many will speak with you for a brief assessment via the phone at no charge. Use this initial phone contact to identify the top three, and schedule a consultation with them.

Preparing For The “First Date” With Your Financial Advisor
Consider this initial meeting as an interview of sorts, and bring a list of questions to discuss. An excellent tool to evaluate advisors can be found in the Comprehensive Financial Advisor Diagnostic at www.napfa.org. You can print it out to bring on your consultation appointments.

Intuition Check-In

This is the last step of the process. After you have met with each of the three contenders, check in with your intuition. Does it feel like a match? Just as you are building a relationship with your money, view the relationship with your advisor as an ongoing process. This is a person who will be privy to an intimate area of your life. You want to feel safe and secure with them. So, check inside and see how you feel after your contact with each advisor. Feel free to follow-up after the first meeting if you are left with questions or concerns. Perhaps you will be lucky, and have a tough decision because all three are fantastic options!

Congratulate yourself for making an educated decision regarding your relationship with money, and having another support person on your Financially Smitten team!