There’s a lot of brainpower on my team.
I’ve written before about my senior analyst who is a Chartered Financial Analyst (CFA). And recently, two of my researchers enrolled in programs to become Certified Financial Planners (CFPs).
We value education here. It allows us to provide you with the best information possible so that you can feel empowered to make the best choices for your situation.
Over the years, I’ve railed against paying fees for so-called experts for things you can do yourself. More often than not, they’re simply plugging your info into a computer program or spreadsheet that spits out an answer. It’s usually worse than useless.
In general, you know what the best, most sound financial decisions for your life are…
But we’ve talked to several folks in different life stages, and there are two specific situations when you might consider hiring your own financial planner…
Time is limited. For most people, researching financial planning is overwhelming or too time-consuming to put in the amount of effort you need.
Now, I love to comb through news and market reports and find the absolute best places to put my money (and where to recommend putting yours), but I realize not everyone enjoys that. Maybe you don’t feel that you have the time to do the proper research or to hash out the best savings vehicles for your kids’ education.
You experience a big life change. For big changes in your life, sometimes getting a pro’s opinion is worth the time and money.
If you’re thinking about retirement planning, a planner can help you figure out your goals and plan investments and savings to get there. Similarly, if you’re starting a family, you may want to consult a planner about college-savings options. If you shift to a new, higher tax bracket or receive a large inheritance and want to make sure you’re making the most of your finances, you might consider a planner.
Your friend, neighbor, or coworker might know “a guy” you should see. But it’s vital that you do your own research before choosing the best planner for you and your situation.
The two biggest points to keep in mind are 1) take the time to find a good planner and 2) understand the costs.
Figure out what you want to accomplish and choose the type of planner appropriately. There are several types of financial planners out there, each catering to different needs. Understanding what goals you want to accomplish will help. That’s because some planners specialize in taxes, others in estate planning or retirement. Still others are more general and can offer guidance across several fields. Make sure to ask about specialization before making an appointment.
As for types of planners, you’ll see CFAs, CFPs, and Certified Public Accountants (CPAs) – these are the three with the best experience, testing, and continued training from nationally recognized organizations.
Next, do a background check. This is a person you’re going to entrust with lots of sensitive information. I recommend starting with a service likeBrokerCheck.com. You can also find a list of registered CFPs right here.
Understand your costs. Some financial planners act on their own and remain apart from bigger brokerages or institutions. Even some banks offer financial-planning services.
Currently, the CFP Board lists three types of compensation… fee only, commission only, and commission and fee. Fees range from fixed rate, flat, hourly, percentage, or performance-based. Get a good idea of what you’ll need to pay for different levels of service from your planner.
You also need to know if your planner will receive compensation based on what they tell you to buy. For instance, if your planner works through a brokerage like Fidelity or T. Rowe Price, they may get paid for recommending in-house funds.
Fee structure and conflicts of interest should all appear in the basic disclosures from the planner. If they’re not in there, find someone else.
I’ve said it over and over… No one will take better care of you than you.
That said, we all need a little help sometimes. If you fit one or both of these categories and have the money available to hire a planner, do a little research instead of blindly going to a planner your neighbor recommended.
- A good review on doing a check on your planner.
- Something different: This might be the best addition to any baseball game.
Here’s to our health, wealth, and a great retirement,
Dr. David Eifrig and the Retirement Millionaire Daily Research Team
June 29, 2017