As you know, I am a financial planner. With that said, there are many people who do not need a financial planner to live their best lives. However, there are probably many more who could benefit from professional financial advice in at least one aspect of their lives. This article is for them.
In the military, we’re pretty familiar with the financial counseling resources that are available, either through our commands or the installation’s support services. However, there comes a time when we’ve paid off our credit cards, established an emergency savings account, and started putting money away for retirement.
At this point comes a logical question: “Even though I feel like I’m doing all the right things, could I be doing more?” This is where a financial planner can help you out. However, with almost 300,000 financial advisers in the United States, finding one that meets your needs can be difficult.
Here are six steps to help you select the right planner for you.
Start with ‘self-help’ first.
No one will ever know more about your situation than you do. There are plenty of Facebook groups with servicemembers, military families, etc. who are willing to share with their community. There are also some very good personal finance blogs focused on servicemembers.
Sometimes it’s just a matter of connecting with someone, or reading an article that answers that one question that will help you put everything together. Some FaceBook groups include:
- Personal Finance for Military Service Members & Families: Led by Rob Aeschbach, this is a great place for people to hang out, post questions, and receive expert advice.
- Veteran 2 Veteran Info: If you’re looking for information related to the VA or veteran’s programs, this is a good place to go. Even if you don’t find what you’re looking for in the group, there are over 300,000 members…odds are, you might find someone who can help you with what you’re looking for.
- Military Landlords: You might be an accidental landlord. If that’s the case, you might find some useful help in this group.
You might find what you’re looking for in one of these groups, or by further research. However, you might decide that you still want to work with a financial planner anyway. That’s perfectly fine. Let’s go to the next step.
Figure out what you want from an adviser.
There are many reasons people form a relationship with their financial adviser. Here are a couple of the top reasons:
- Building confidence. Perhaps you’ve been doing all the right things all along. You just need a review & some validation from a professional.
- Better Use of your time. You might know what you’re doing, but personally managing your personal finances isn’t an efficient use of your time. You’d rather focus on your career, family, or personal pursuits.
- Getting organized. Many times, personal finances are a reflection of one’s personal life. Many people feel overwhelmed by taking that first step that they never start. Hiring a professional can be that first step, which allows you to know that it’s a step in the right direction.
Whatever the expectation, you should be able to define that expectation before you start looking for a financial planner. If you don’t, it will probably be harder to find a planner who is the right fit for you.
Figure out who you can trust.
You don’t have to blindly start interviewing people you don’t know. Most financial planners work with people who are referred by mutual contacts. This could be through friends, family, or trusted professionals such as accountants, real estate agents or estate planning attorneys.
Odds are, if you know people who already have a good relationship with a financial planner, you’re probably going to be a happy customer as well.
If you don’t know anyone who can connect you, a good place to start is the National Association of Personal Financial Advisors (NAPFA). NAPFA is the world’s largest organization of fee-only financial planners. A fee-only financial planner is someone who doesn’t receive commissions on any insurance or investment recommendations. That way, you know that the planner’s advice is aligned with your best interests.
NAPFA has a search tool that allows you to find registered advisors in close proximity to where you live. If you don’t have any idea how to find a planner, NAPFA is a good place to start. If possible, select 3-5 planners to research.
Do your research.
If someone is referring you to a financial planner, you might not need to do much research. You’ll still want to ask your referrer some basic questions about their relationship. This way, you’ll have a better idea if your initial meeting or phone engagement is in line with your expectations.
If you’re having to research NAPFA advisors, you can learn a lot just by looking at their website. Every NAPFA advisory firm is a registered investment advisor. Registered investment advisors have two distinctions.
First, they must uphold the fiduciary standard. This means they are legally obligated to hold their clients’ interests before their own.
Second, registered investment advisors must file a form known as an ADV. An ADV, which is filed with the adviser’s state or the SEC, is a plain-language document that informs clients:
- What the adviser does (or doesn’t do)
- How the adviser is paid (NAPFA advisers must clearly state they do not accept commissions, since they are fee-only)
- How that fee is structured (retainer, assets under management, etc.)
- Adviser’s education & experience
Financial advisers are legally required to present their clients with a copy of their ADV when their contract is signed. However, you can research this online either through the adviser’s website, or through the state regulatory agency. That way, you’ve got a pretty good idea of what the adviser does before you decide you want to meet with them. Enclosed is an example of an an ADV (it's the ADV for my firm, Westchase Financial Planning, which is registered with the state of Florida).
Interview your prospects.
Once you’ve researched the people you’d like to talk with, then you should set up times to talk with them. Most financial planners, or their firms, will offer some sort of introductory phone appointment to discuss their services. This is your opportunity to discuss the ‘wave-top’ issues that concern you, and determine if the firm can help you.
However, don’t expect to go into depth on solving your problems. Financial planners aren’t keen on doing so, unless your needs are too basic to warrant a relationship. In that case, the planner might give you similar advice to what you would see in one of the above forums or refer you to another planner.
During your initial appointment, you should cover the following:
- Ask for a copy of their ADV (if you haven’t already reviewed it). Going through the ADV and asking informed questions will allow you to gauge how a planner will respond to your financial situation.
- Ask about the firm’s experience working with people like you. Financial planners usually try to relate to their clients by communicating their experience. You should ask the planner situation-specific questions that will allow you to determine whether their skillset will be sufficient for your situation.
- Ask about the process. Financial planning isn’t about a desired end state. There’s a process involved, which usually adheres to the following professional standards outlined by the CFP® Board:
- Establish a relationship with the client
- Gather information from the client
- Analyze information with the client
- Develop recommendations
- Implement recommendations
If you’re going to work with a planner, it’s worth understanding how their process works.
Once you select someone, trust them until they give you reason not to.
You’re going to put a lot of work and effort into hiring a planner. However, once you’ve decided that they’re worth hiring, that’s when you should trust that they know what they are doing. You might not solve all of your issues & concerns overnight. However, within your first year, you should definitely feel as though you’re well on your way, or that most of your concerns are behind you.
With that said, you may have some indications that your planner’s not doing their job. Here are some guidelines:
- Non-responsiveness. While you might not always have access to YOUR planner, you should expect timely response from the admin staff, paraplanner, or another planner in the firm. Most firms have a policy of returning phone calls and emails within 1-2 business days. They should also be able to set up appointments within a reasonable time to address unexpected concerns.
- Complacency. Your concerns are serious, even if they might be relatively simple. Your planner should take your concerns seriously as well. If not, that’s a concern.
- Attitude. Clients are the reason that financial planning firms exist. Your financial planning firm should definitely keep that in mind.
Hiring a financial professional is not something to take lightly. In a true relationship with a financial planner, many people disclose information they would never tell their own family members. If you feel that you are in a position to hire a financial planner, it’s definitely worth taking a little time and effort to ensure that your relationship will be a fruitful one.