The right investment professional can help you achieve short- and long-term goals.
Before having our now-toddler son, my husband and I were fortunate enough to live our lives with relatively minimal financial oversight. We spent money on things we wanted or needed, contributed to our retirement accounts, had a small cushion left over, and that was that.
But things change.
Our son, small as he may be—and as thrifty as I may be—has added extra costs to the household’s bottom line. We have to feed him, clothe him, keep him in good health, and entertain him with books, toys and all sorts of things that light up, play music or roll around. We also have to pay for child care (although not as much as if we needed it full-time; thank you, Grandma!) and the occasional sitter.
Add to that our beloved mutt’s vet bills for three surgeries in less than a year, a major car repair, unexpected household expenses and the nagging sense that we should be contributing more to our son’s education fund and our own retirement, and quickly, our financial cushion felt significantly less cushy. So when a friend mentioned meeting with a financial adviser, I was all ears.Get top reads, event recommendations, guides, parenting trends and more ideas for family fun. Subscribe to Columbus Parent’s weekly e-newsletter, The Bulletin.
Of course, a recommendation from a friend isn’t the only thing you’ll want to have when hiring a professional to help you get your finances in order. Here are other important elements that should drive your decision-making.
Treat Them Like A Blind Date
Financial planners have a host of backgrounds and offer an array of services. They can be insurance agents, accountants, brokers, investment advisers and even people who lack any formal financial credentials.
Because of its wide-ranging nature, the overall industry does not have its own regulating body, although financial planners may be subject to regulation because of other services they provide. For instance, an accountant who prepares financial plans is regulated by the Accountancy Board of Ohio.
Getting a recommendation from a friend, family member or someone else you trust is always a good idea. Other resources to find a financial planner include the National Association of Personal Financial Advisors, the Garrett Planning Network and the Alliance of Comprehensive Planners, all of which have searchable databases of their members.
Once you find a promising candidate, Google them. Look at their social media and web presences. Check their credentials and take the extra step to contact the organization that issues them to confirm that they’re accurate. Ask for client references, and don’t be afraid to ask potentially awkward questions of the planner, such as if they have a criminal background or have been the subject of any professional investigations. (Need some more guidance? Here’s a list of questions to get you started.)
Just like a date, you’ll want someone who listens to you, and to what your goals are. You want a planner who pays attention to your comfort with risk, who sees your vision for the future and who wants to help you to achieve it.
Those Three Little Letters
Three little letters, CFP, mean a lot. While anyone can call themselves a financial adviser, one way to assure yourself that someone has the education, experience and ethics to do steer your financial ship is by finding a Certified Financial Planner. That designation means they have taken mandatory classes, passed a certification exam, logged thousands of hours of work experience and committed to adhering to a standard of ethics and practice, among other requirements.
As you research, you’ll notice an alphabet soup of professional designations following an adviser’s name. The Financial Industry Regulatory Authority (FINRA), the nation’s largest independent regulator for securities firms working in the U.S., has created a tool for you to decode the designations and learn more about what they mean. It also maintains a database called BrokerCheck that lists the background of registered investment professionals, including employment history, discipline and customer disputes.
The U.S. Securities and Exchange Commission also maintains a database on its Investment Adviser Public Disclosure website of advisers registered with the SEC and individual states. The site also links to FINRA’s BrokerCheck system.
Note that the Ohio Division of Securities issues licenses to broker-dealers, anyone who sells securities and investment advisers. The website has numerous informational links, a complaint mechanism and advice on both finding an adviser and investing.
Who’s Making Money Here?
Ideally, your relationship with a financial planner is beneficial for you both. But you’ll want to know exactly how that person is being compensated. A fee-only planner might charge a flat rate, by the hour, or as a percentage of the assets they’re managing on your behalf. On the other hand, a commission-based planner may charge fees whenever you buy or sell a stock or make other investments. In some cases, that can lead to potential conflicts of interest if a trade benefits your planner more than you.
Along these lines, you’re wise to look for a planner who is a fiduciary. That means they’ve promised to act in the client’s best interest at all times. This is key, because advisers who aren’t fiduciaries are held only to the “sustainability standard,” which means anything they sell has to be suitable for the client—but isn’t necessarily in your best interest.
Ultimately, choosing the financial planner who is right for you won’t be a source of immediate gratification. It takes time to find someone who is trustworthy, knowledgeable, experienced and ethical, and who will be the right fit for your family and your goals. But taking the time to find the right match is time well invested.
Jennifer Wray is a freelance writer, mother and fan of all things pop culture.