This is a very long - three part post combined into one for your reading ease - It is for informational purposes only and meant to help you in finding a trustworthy professional trained in areas of expertise to assist you in making those possible life changing decisions post RV -- Good Luck -- Come On RV !! Also would like to note there seems to be a challenge with my spell checker and the journalists' as they continue to spell adviser -- "advisor" - this has happened before - The journalists' spelling was not changed - Thank You The Recaps Team
Why To Hire / How To Hire & When To Fire A Financial Adviser/Planner
By Nora Dunn & Jeff Rose
How To Choose A Financial Planner - Yes You! By Nora Dunn
I don't care who you are. (Well, actually I do, otherwise I wouldn't be writing this).
What I mean, is I don't care about your background, education, financial prowess, or absolute lack thereof. You need a Financial Planner!
Read More Link On Right
Pursuant to Julie's article on Personal Financial Advisors Awaiting Your Call, there are a number of different credentials, titles, creeds, and pay-scales that flood the financial services industry and can confuse the heck out of the average bear.
In fact, even the idea of seeing a Financial Planner may be so daunting (or embarrassing?) that you find ways and excuses to avoid it altogether. Here are a few things to think about in your search, or to compel you to search depending on your current position.
1 - Everybody needs a Financial Planner. I feel very strongly about this one. I don't care if you have $70,000 in debts and $5 to your name (I actually had a client like this once), or the other way around.
A Financial Planner is more than a money manager, and everybody can benefit from their services. And the younger you are when you start to take control of your finances with the help of a planner, the better off you will be in the long run.
2 - Call them what you will. I'm calling them Financial Planners here, but they can be Financial Advisors, Investment Advisors, Personal Bankers, etc. Technically anybody can hang a shingle out tomorrow calling themselves a Financial Planner. The trick is…
3 - What are their credentials? As Julie mentions, there are any number of letters and credentials and titles that people can carry.
The hallmark for Financial Planning is the CFP (Certified Financial Planner) designation, which is internationally recognized, the requirements of which entail years of education in addition to extensive work experience.
4 - Where do they work? Check out the company the Planner in front of you is representing. Are they a major player in the industry, or a ma-and-pa shop? Some people don't mind ma-and-pa, some do.
Are they limited to proprietary investments, or can they recommend what is truly best for you? A large firm generally lends some credibility to the Planner, although this isn't a sure and fast rule. Ask your friends & family who they use; most often referrals work wonderfully.
5 - What can I expect? True financial planning isn't investment management. It isn't banking or loan services. It isn't insurance. And it isn't taxes. It's everything. A real Financial Planner is going to take a personal approach to your financial situation.
They should sit down with you and analyze your entire financial situation. Income, expenses, assets, liabilities, insurance, and even some of the intangibles like your personal approach and attitudes towards money.
They should be interested in what you want to accomplish with your life, what major purchases you have in your future, what sorts of vacations you like to take, and how you envision your retirement years.
They also need to know your personal tolerance for risk and fluctuation in your investments, and should coach you on it. If they don't do all these things, they can't properly advise you!
6 - Won't this cost a ton? Financial Planning actually doesn't have to cost you a penny out of your pocket, depending on the planner and where you go for your services. Many banks have a team of Financial Planners who are available to help the bank's clients. They are paid a salary by the bank, and often don't cost you a thing.
You can also choose asset-based advisors who again, you won't have to pay for out of pocket, but who are only compensated by their employer based on the money you invest with them.
Believe it or not this doesn't mean that you necessarily need a ton of money to invest; many of these advisors want long-term relationships and believe they can help you over the long run and will ultimately be compensated for it.
And of course, there are also fee-based planners and those with other methods of compensation, which go beyond the scope of this article.
7 - Who is best for me? What you need to look for in a planner is somebody you like first and foremost. If you're going to share details about your financial life and dreams and expectations, you need to feel comfortable opening up to them and establishing a relationship of trust.
8 - Can't I do all this on my own? There are a ton of solutions out there on the internet. My response to that is: Do you have a life? The job of a Financial Planner is a full-time gig. They know a lot and need to stay up-to-date in the ever-changing world of finance.
If you keep up with all the latest tax legislation, investment regulations, and insurance opportunities and lingo, then be my guest and give it a whirl. What you'll still be missing is a third party perspective, and possibly some creative strategies that you (or your research) didn't think of.
In addition, I believe in delegation, and the fact that time is money. You defer your legal matters to your lawyer, and tax matters to your accountant. You defer your medical matters to your doctor. You don't perform surgery based on an internet program's recommendation, do you?
And if you are still asking why you can't just do it on your own, please refer to point 5 again. I've yet to find a financial planning program that is intuitive enough to do all that.
Your time outside of work is better spent enjoying life, spending time with your family, and chasing down dreams. Not toiling over your finances in a hap-hazard way. Really.
Do a Background Check Before Hiring Your Financial Advisor By Jeff Rose
What was the last major purchase you made? Was it car or a flat screen TV? How much time did you spend researching to make sure you were getting the best product for the best price? Now, for those of you that have hired a financial advisor, how much time did you spend doing research on that advisor?
The statistics say that over 2/3 of investors do not do a background check before hiring their financial advisor. Do I even have to explain why you should? Let me give you one: Bernie Madoff.
While I know in the Madoff scandal a background check would have done little good, it is still a good idea to make sure there's nothing incriminating on your soon to be advisor's record. I assure you that you can do a background check much quicker than researching a HD TV. Don't believe me? Follow these steps and see for yourself.
1. Certified Financial Planner
One of the most coveted marks of all financial planners is the Certified Financial Planner™ designation. Disclaimer: I am a CFP® professional. Only those who have fulfilled the certification and renewal requirements of CFP Board can display the CFP® certification marks.
CFP® professionals agree to abide by a strict code of professional conduct, known as CFP Board’s Code of Ethics and Professional Responsibility, that sets forth their ethical responsibilities to the public, clients and employers.
By being held to a higher standard, these professionals are under greater scrutiny than other advisors in the industry. By going to the CFP website, you can use their search tool to find out if the planner has had any disciplinary actions against them.
2. FINRA Broker Check®
A financial advisor that is employed by a brokerage firm is most likely a registered representative and is regulated by FINRA (Financial Industry Regulatory Authority). To help investors keep tabs on financial advisors, FINRA has developed a service called FINRA BrokerCheck®.
All you need is the person’s name and you’ll soon have all the background information of the advisor available to you in a printable PDF format. You'll be quite impressed on the amount of information that they provide. Some of the information you might find:
Any complaints that have been filed against the advisor and what was the outcome
States that the advisor is licensed to transact business in
Industry exams that they have passed
All previous employment history
Outside Affiliations -- this will show if the advisor receives compensation from other sources or is involved in any organizations
3. Securities Exchange Commission
If your advisor holds themself as an Investment Advisor most likely they are a Registered Investment Advisor (RIA). People or firms that get paid to give advice about investing in securities generally must register with either the SEC or the state securities agency where they have their principal place of business.
Investment advisers who manage $25 million or more in client assets generally must register with the SEC.
If they manage less than $25 million, they generally must register with the state securities agency in the state where they have their principal place of business. Remember my one reason why you should do a background check on your financial advisor? That's right, Bernie Madoff was an investment advisor. That’s why the SEC has taken a lot of heat over the matter.
If you do decide to work with an Investment Advisor, the SEC's website would be your first stop in doing a background check on your advisor. If they are a smaller outfit, you can check with the state regulator’s.
One source is the North American Securities Administrators Association. The NASAA has helped in preventing investors from being subject to fraud for over one hundred years.
4. Advisor Check
Advisor Check is a free online service meant to allow consumers to investigate the professional background of financial advisers. The service looks into the background of financial advisers through civil and criminal background checks, credit reports, financial liens and bankruptcy proceedings, the records of the Better Business Bureau, the Securities and Exchange Commission, state departments of insurance and professional licensure, the Financial Industry Regulatory Authority Inc. and various other federal, state and private agencies.
If you are looking to do even more extensive research on your soon to be financial planner, it won’t hurt to at least check the site out.
5. FA Beetle
Fabeetle is a new platform where clients can rate, review and research financial advisors, the firms they work for, and the products and services they offer. The concept behind FA Beetle is to allow the truly talented and experienced Financial Advisors and firms to emerge from the negative perceptions and connect with an educated customer who is actively seeking that expertise.
The site even offers "falerts" that will notify you if an advisor that you're monitoring receives a review from another consumer. The site is still its beta stage, but could prove to be a valuable resource for consumers.
6. Don't Forget Social Media
Using the above resources is a great way to find some really good information on your financial advisor, but what about just using Google? By simply "Googling" the advisor's name, you might be surprised what you might find. If the advisor is on Twitter, Facebook, or LinkedIn, you might also be able to find out some good information, too.
For example, if the advisor has a public profile on Facebook you can see their latest updates and it may give you a clue on what type of person they are. That goes for Twitter, too. On LinkedIn, you can view all their connections and if anybody has recommended them.
As you can see there are plenty of resources to do some homework on your financial advisor before you hire them.
Don't allow yourself to be part of the percentage who doesn't take the time to do a background check. It's much easier to return a lousy TV to Best Buy with little financial recourse. Choosing a lousy, unscrupulous financial advisor could cost you your future and leave you in financial ruins.
9 Signs You Need to Fire Your Financial Planner By Nora Dunn
In tough economic times, financial planners are on the front lines. They are the gateway to investment returns when the markets are good, and are the buffer against financial disaster when the markets are bad.
When I was in the financial planning business and markets experienced corrections of sorts, my colleagues and I would brace ourselves for something called “statement shock”.
Clients would receive and open their quarterly or monthly statements, and regardless of whether they were keeping up with the news of market performance and understood the circumstances, they would experience a certain degree of shock when they realized how their own dollars and cents were affected.
There were three possible outcomes from this onset of statement shock:
They would realize that it is a function of the markets and not the planner and stay the course
The would call their financial planner for some reassuring words of encouragement and possibly ask for a meeting to devise a new action plan
They would look for a new financial planner
I was lucky. Most of my clients fell into categories one and two. I worked hard to educate them, work within their tolerances for risk, and was there to hold their hands when they needed it. This also usually put me on the receiving end of new clients who were in category three and displeased with their old financial planners.
But in times like these, when terms like “Meltdown Monday” and (sshhh…the “r” word) are being tossed around, financial planners around the world are waking up in the middle of the night in cold sweats.
Try as they may to buffer their clients against market downturns, statements will look bad. And they will be sure to hear about it. And ultimately through no fault of their own, they will lose clients.
Some planners though, will lose clients, and arguably deserve to. They will not have performed the proper amount of due diligence with their clients by assessing their investment personalities and time frames, and instead of facing the music when their clients call, they may instead choose to hide under their desks as a way to weather the storm.
They will not have addressed their clients’ larger financial situation and dealt with issues like taxation, short and long term savings, and estate planning, and will instead have simply focused on returns – something which can never be promised and will never be predictable (unless you are invested solely in term deposits, in which case again I would suggest the advisor’s incompetence).
If you are experiencing statement shock, or are wondering if your financial planner is up to snuff, here are nine signs you may need to fire your financial planner:
They never asked you about your personal goals and time frames before recommending investments.
There is no such thing as a one-size-fits-all investment plan. Although having a standard set of investment recommendations according to your stated time frame and tolerance for risk is acceptable, they must do the initial groundwork to determine who you are and what you want from your money.
Only one company’s products are recommended.
As good as that company’s products are, true diversification includes not only a range of asset classes, but also a range of investment managers. Recommending only one type of or company-labeled product indicates that the advisor is not providing truly unbiased advice.
You received no written financial plan, prospectus, or documentation.
Every investment product should be accompanied by a detailed written description of the investment, including its composition, historical performance, and inherent risks and rewards.
This is generally covered in the prospectus, which is a bare minimum of what you should receive. Better yet though – you should also be given a written financial plan, which addresses your personal financial situation and outlines a financial road map to reaching your goals – both short and long term.
You are pressured into making investments.
Although sitting on the fence forever is an advisor’s nightmare and sometimes clients need a little extra push, undue pressure into doing something you are uncomfortable with is not right.
Even if the recommendations are sound, if you get bad vibes from high-pressure sales tactics, your ability to communicate with this advisor and for them to listen to your needs is going to be problematic going forward.
Your planner’s recommendations don’t match your financial goals.
You say you want to save up to buy a house, and your advisor recommends high-risk long-term investments. Something is not jiving here, and it is likely that they are either not listening to your needs, or are not acting in your best interest.
You can never reach your advisor when you want to, and they don’t return your phone calls.
With an onset of statement shock, you need to talk to somebody. Often big problems and feelings of discomfort can be alleviated with a simple phone call and a reassurance that staying the course is the best thing to do.
But if you can never reach your advisor, if they pawn you off on an assistant, or if they don’t return your phone calls promptly, they are not doing their job.
They constantly change your investments.
Seeing a regular list of transactions coming through may lead you to believe your portfolio is being actively managed.
However a true financial planner (and not a broker, who is transaction-oriented) should be focused more on the game plan and less on making money by moving it around. It’s a “slow and steady wins the race” approach.
Too many transactions may also mean that they are making commissions on each move – a sign that they are not truly working for you.
The plan given to you seems too good to be true.
If it seems to good to be true, it probably is. If that tax strategy seems a little lofty, or you are introduced to a strategy that you’ve never heard of that goes in the face of everything you know to be true and legal, then you may find eventually yourself in hot water.
Although the advisor may be liable, you are ultimately the one who will have to clean up the mess if your financial actions were unruly.
They tell you they can time the market.
I don’t care who your financial planner is – they can’t time the market. If they call you wanting to make drastic changes based on what they think the market is going to do, run. What they should really be focused on is you, your goals, and a plan (and portfolio) that will weather the good times and the bad.
Sure – small adjustments here and there may be prudent, but moving everything in and out of different asset classes is a losing game. They may get it right a few times, but all it takes is one bad calculation to lose everything you have gained.
If it is indeed time to fire your Financial Planner:
Please do them a favour and give them a call. Sometimes things are lost in translation, or a breakdown in communication is accidental. In my experience, people can be short-sighted, focusing on returns and setting unrealistic expectations based on short term performance.
When the markets are booming, people expect consistent double-digit returns and forget not-so-distant times when that wasn’t the case. And vice versa: after a stretch of poor performance, the same person may be convinced that the bad times will never end and want to stash all their money under the bed, forgetting to take the bad times with the good to achieve an overall rate of return that will help them attain their goals.
By calling your financial planner and giving them a chance to explain their actions, you may be able to save the hassle of moving your accounts and starting from scratch with a new planner.
Then again, don’t stick with a planner because it is the easy thing to do. If your financial planner is the culprit of any combination of the above mentioned blunders, it is a problem that needs to be addressed and fixed – either by finding another planner, or by tuning your existing planner in.
Statement shock sucks, through and through. But don’t take your eye off the ball because of the initial shock of seeing your investments lose value.
If the markets are down overall, don’t blame your financial planner; they don’t have a crystal ball. And if they pass the acid test above, then keep communicating with them and together you will weather this market downturn, as with every other downturn.
The media will sensationalize every market correction and somehow identify that this is the worst, the most dramatic, or the hardest whatever since whenever. But time and time again, slow and steady is what wins the race.