How to select a financial professional?

In the coming week there is a fair bit of change arriving on the financial landscape.  As a consumer, the financial professional with whom you choose to work with will have more disclosures to provide you in your ongoing relationship.  Here’s what you need to be aware of.

• New Code and Standards will be enforced by the CFP® Board starting June 30^th, 2020. Those who hold the Certified Financial Planner designation, or CFP®, must comply and continue to put your interests, as a consumer, first – without exception.  This is in addition to disclosing any conflicts of interest that may arise as you work together in planning your financial journey.

 

• The Securities and Exchange Commission has issued “Best Interest Regulations” in order to better inform the consumer on the advice they receive, and the corresponding compensation paid to the financial professional providing the advice. How does the SEC accomplish this?  Form CRS or as it’s known, client relationship summary, spells out in plain English what investment services and advice may be provided.  It further details what fees you may pay and how your financial professional makes money.  You should be provided this form when exploring new accounts or a new relationship.  The copy we share is available to view here.

These are all positive changes from my perspective, and frankly, long overdue.  No, it won’t fix or address all of the problems or conflicts of interest that arise, but it’s a positive step forward.  It’s one of the driving reasons that I left my previous firm of 23 years, last November, to create a more transparent, independent firm focused on comprehensive planning.  Holding objectivity in the advice you provide is paramount.  This approach is the key to building mutual trust and respect.  This allows those who seek guidance to know they are getting all the information they need so they may make better, more informed financial and life decisions.

So, how do you go about selecting a financial professional?  If my family was looking to identify a financial professional to work with today, here are some of the steps I’d take, questions I would ask, and areas I would seek to understand.  (in the spirit of full disclosure, I act as my family’s financial planner and my wife and three boys seem pleased thus far in our relationship 😊)

• Get a recommendation from a friend or an advisor (attorney, CPA, mentor) you trust. Ask them about their planning experience and why they recommend this professional.

 

• Has the financial professional invested in their education and what designations do they hold? There are a ton of financial designations out there, many of which I’ve invested the time to earn.  I hold the CFP® designation and would place it at the top of the list.  The oversight and ongoing work by the CFP® Board to further the mission of planning with the public is important work.

 

• With whom do you work and what services do you provide? Different financial professionals work with different clients and provide different services.  Understanding background and services offered may help you understand what you may gain from that relationship.

 

• How many clients do you serve? You may want to have a connection with your advisor and not feel like you’re just a number.  Personalized attention may be important to you, service and responsiveness is usually an important factor.  What does their team look like and how do they work together?

 

• How does the financial professional communicate with clients and at what frequency? Do they prefer to email, conduct in-person meetings (likely moved to virtual meetings given Covid 19), or make phone call check ins?

 

• What does the financial professional’s process look like and how does it help you accomplish what you want? Does a formal process exist, what happens, and when?

 

• How does your financial professional get compensated? There are a lot of ways to be compensated for services and/or products delivered.  It’s important to understand this, and the above mentioned form CRS will increase transparency.

 

• What online tools and access is available? What other planning instruments or software is used in the relationship?

 

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