HELP! – How to avoid “being sold to” by a “so-called” financial advisor.

 Gimmicks. Big words, expensive cars, and fancy suits. Promises, pages, and pages of glossy reports, pie charts, and stories about how their perspective is special because of their history. We call them asset-gatherers, and they are many. They are hunting for money and you are their target.

Have you ever wondered why it seems like you must turn over your lifesavings to someone you barely know, just to get some financial advice? Have you been working with someone for years and at some point, felt like you or your spouse are being forgotten or ignored? Are the answers to your questions always the same? Do you even get answers to your questions?

​What happens more often, your financial planner asks:

1. For referrals. -or-
2. If he/she could be doing something (or anything) better to help you?

Chances are, you are dealing with an asset-gatherer, not a fee-only financial planner. That is an important thing to know because they both have very different perspectives on what their job description is and who they work for. An asset-gatherer represents a firm, and their primary job function is to sell investment management services for the firm. They are contractually limited and have very few fiduciary obligations to you. A fee-only financial planner is different in that they generally have a contractual fiduciary responsibility regarding all the advice they give you, and therefore, your results matter – IN A VERY BIG WAY.

When you are considering whether to hire a financial planner for the first time or if you should change advisors to a fee-only financial planner, here are some pointers that might help you:

​

If it is free, is it really free?

If you can get a financial plan or investment management for free, there is an issue. If you are required to turn over management of your investments to get a financial plan, there may be an issue. Some financial planners charge an annual percentage of the assets for which they are designing a financial plan for, and therefor offer investment management services as a part of the fee. If the planning is free or requires investment management, you must:

1. Access their planning expertise. Is financial planning their primary focus or do they offer it just to get your investments?
2. Assess their investment expertise. Financial planning and investment management are completely different specialties. What is the value of their investment management program in relation to your situation and why do you need their investment expertise?

Best practice: Hire a fee-only financial planner who can provide a financial planning service without requiring investment management. When hiring a fee-only financial planner you are more likely to be charged a reasonable fee for the financial planner’s time and expertise. Comparable to paying an attorney or CPA, if the services are too inexpensive then the financial planner may not have the expertise you expect and need. If the services are free, you have not actually hired anyone.

True friendship comes free.

A financial planner provides a professional service, so try to avoid looking at your financial planner as a friend. This sounds harsh, but you need someone to tell you what you need to know, not what you “want” to hear just to keep you satisfied. You also need someone whom you can speak frankly with if you are not getting the service or advice that you need. I am not saying that you cannot be friends with your financial planner. I am saying that you are paying for a service, so you need to get results commensurate to what you are paying. If you feel trapped between losing a friend or not getting good advice, then you need to make a change.

Fee-only Financial Planner (reference form CRS). Do you really want to work with a financial planner who has no way to charge you for providing financial advice, outside of selling you some sort of investment product or investment management service? If you only need or want advice and not investment management help, then why pay extra? Find a fee-only financial planner and pay special attention to the word that follows fee-____.

​A fee-only financial planner is very different than a fee-based financial planner.

Although they sound alike, fee-only financial advisors generally carry an ongoing fiduciary responsibility to their clients and are restricted from making any sort of commissions, kickbacks, or any other type of unlevel compensation based on which investments they recommend to you.

Fee-based financial planners can move back and forth between services that require an ongoing fiduciary standard, so you may not clearly understand who benefits more from the new investment or insurance they want you to purchase (you or them). SEC started requires firms to provide a Client Relationship Summary (form CRS) to all clients and prospects before engaging in new business. The form is written in plain English and standardized. You can use the form to identify if your financial planner is fee-only or fee-based easily. Fee-only financial planners will have a 2-page form that will be very clear about how they charge fees and that they do not receive commissions. Fee-based financial advisors will have a 4-page form; 2-pages for fees and 2-pages for commissions.

​Your money, your life.

Get the most out of both. Good financial planning drives good investment management decision-making. The combination of good financial planning and good investment management decisions leads to financial success. When you have financial success, you have less stress and more time for things like family, entertainment, fun experiences, and great conversations with friends. Get your money to work for you by getting a fee-only financial planner who works for you, not for your money.

Would you like to speak to our team? We offer a no-cost, no-obligation first discovery meeting to learn if planning is appropriate for you. We have video-conferencing technology and are not limited geographically. Wherever you are, if you need help, we can help you! Connect with us by filling out our form at www.seedpg.com/contact.