Making financial decisions can be a daunting task. Save for college or for your golden years? Make plans for a vacation or finalize plans to build a vacation place? Retire or retire that thought? IPO? Oh, who knows?
Navigating the ever-changing complexities of your money life, not to mention the ever-changing investment world, are reasons enough to keep a financial professional on speed dial. But do you really need to hire a financial planner? What should you look for? How much should it cost? Your answers are right here.
What is a financial adviser?
A financial adviser, also known as a financial planner, is a professional who makes sense of their clients’ financial needs and wants. Some advisers have a specialty, known for helping clients with investment selection or estate planning, for example, while others may work with a particular clientele, such as doctors, or small business owners, or employees from a particular industry.
Most financial advisers offer comprehensive advice, meaning they will look at all aspects of your money life to develop a financial plan that accounts for short term goals — think vacations and car purchases – and long term goals – think plotting investments to prepare you for retirement and monitoring your money in retirement so you never run out.
Some advisers work for larger, well-known companies such as Ameriprise, Fidelity, or Merrill Lynch. Others are independent, and work for smaller firms, or themselves. Many banks also have employees on hand to help with wealth management.
Is an adviser right for me?
As you’re considering an adviser, identify the main reason (or two or three) that is prompting your search. Is it a long-term goal such as planning for retirement? A one time need, like crunching the numbers on buying a lake home? Or a nagging feeling that you need guidance for just about every money matter?
It’s important to consider the scope of your questions because some advisers will offer as-needed financial advice while others require an ongoing relationship.
Making sense of the alphabet soup.
AEP, CFP, CFA, CLU, CDFA, WMS, HELP! There are so many professional designations, or labels designed to describe a person’s education and qualifications, that FINRA (Financial Industry Regulatory Authority) created a tool to keep them all straight. (finra.org/Investors/ToolsCalculators/ProfessionalDesignations/DesignationsLookup/).
Over the years, the CFP, or certified financial planner designation, has become the gold standard according to many experts. A CFP must complete education, pass an exam, gain three years of relevant experience and agree to a strict ethics guidelines to add those letters to their business card.
How to select an adviser.
To narrow down the broad universe of options, ask trusted family, friends or co-workers if they work with a financial adviser. Your tax accountant, attorney or Realtor may also have ideas. The Financial Planning Association (fpanet.com) has a comprehensive “find an adviser” tool that allows you to narrow adviser choices by many criteria such as geography and specialty as well. The National Association of Personal Financial Advisors is another solid resource (Napfa.org).
Keep the questions coming.
Once you’ve collected some names, your work has just begun. Most advisers offer a free get-to-know-each-other session to see if the chemistry is there for a good professional relationship. You need to ask a lot of questions in that meeting. After the financial crisis and Bernie Madoff’s long con, a good adviser should expect the third degree from a prospective client, and shouldn’t blink an eye if you ask for proof of education or years worth of disciplinary records from the Securities and Exchange Commission.
What questions should you ask?
- Are you a fiduciary? Fiduciary is a term that means the professional is required to put the clients’ interests first, 100 percent of the time, no matter what. Many financial professionals are legally held to a less-stringent standard called the “suitability standard.”
- How often will I see you? Different advisers structure their meetings differently. Find out if you will have quarterly in-person meetings, semi-annual video conferences, monthly phone check-ins, or a combination of the above.
- Will you return my phone calls (or emails. or texts)? Set expectations for how quickly your adviser will get back to you so you aren’t frustrated by what you might consider lack of response and what they consider business as usual.
- Will you work with me? Some advisers require a certain amount of investable assets, or money available for them to manage. Others consider potential income growth and other factors when deciding if a potential client is a good fit.
- How will I pay you? There’s no such thing as a free lunch, although financial advisers love their lunchtime seminars. All financial advisers get paid for giving you advice. But it can be vexing to determine exactly how advisers are keeping the lights on and what conflicts of interest there are to consider. Many certified financial planners are also fee-only financial planners. That means they are not paid commissions based on what investments or insurance you buy. Instead, fee-only planners are paid a set fee for a particular project, an hourly fee, or a percentage based on the amount of money they are managing for you. For example, an adviser charging 1 percent of assets under management for a $500,000 portfolio would cost you $5,000 a year for the adviser’s services. Some advisers are paid a mix of commissions and fees. Yet others are taking a cue from lawyers and working on a retainer, allowing clients to pay a set fee to have access to an adviser on an as-needed basis. There are benefits and drawbacks to each structure. Bottom line: a good adviser will take the time to clearly explain what his or her services will cost you and why that’s the model they’ve chosen.
Not your father’s financial planner.
New technology means more options for financial advice than ever before. If sitting face to face with an adviser isn’t as important to you as cost-effective investment advice and a Steve Jobs-smooth interface, test drive an online portfolio management tool such as Betterment and Wealthfront. These tools focus on investment mix, not advice. Hybrid offerings such as Personal Capital and Learnvest.com combine sophisticated online tools with an adviser that will work with you via phone or video conference.
It’s not me, it’s you.
Sometimes, even the most well-intentioned relationship doesn’t work out. Or a great relationship sours over time. If you find yourself second-guessing your choice of a financial adviser, don’t push those thoughts aside. Trust your gut. Consider switching advisers if any of the following 10 statements are true:
Breaking up with your financial adviser can be hard. A personal relationship tends to develop when you’re dodging stock market tumbles and discussing your life dreams with someone, even if you pay them for the privilege. Not only that, but moving your money may result in withdrawal fees or tax consequences that can be costly in the short-term.
If you feel the relationship isn’t working, but the issue could be fixed, don’t blindside your adviser. Let him know and give him a chance to change. This will also buy you time to assess your situation and plan your money’s next move. If you are expecting a fight, and your decision is related to suspicious activity or reasons that aren’t likely to be rectified, writing a detailed letter or email can trump a conversation for severing ties with limited hassle.
If you want to leave because of a relocation or a change in circumstances, not your adviser’s performance, have a candid talk. A good adviser will objectively assess the situation, and may even introduce you to your next financial planner.
- He never calls or emails. Or returns your calls or emails.
- He ignores your significant other.
- He dismisses your concerns.
- He can’t answer your questions. At least not in a way you can understand.
- He doesn’t listen.
- He ignores your tolerance for risk.
- He brags about past performance.
- He consistently underperforms the market.
- He won’t explain his fees.
- He places his own interests first.
Breaking up with your financial adviser can be hard. A personal relationship tends to develop when you’re dodging stock market tumbles and discussing your life dreams with someone, even if you pay them for the privilege. Not only that, but moving your money may result in withdrawal fees or tax consequences that can be costly in the short-term.
If you feel the relationship isn’t working, but the issue could be fixed, don’t blindside your adviser. Let him know and give him a chance to change. This will also buy you time to assess your situation and plan your money’s next move.
If you are expecting a fight, and your decision is related to suspicious activity or reasons that aren’t likely to be rectified, writing a detailed letter or email can trump a conversation for severing ties with limited hassle.
If you want to leave because of a relocation or a change in circumstances, not your adviser’s performance, have a candid talk. A good adviser will objectively assess the situation, and may even introduce you to your next financial planner.
Financial Spotlight
Left to right: Donald C. Benson, Jr., CFP®; Lisa Guzek Montagné, Principal, CFP®; Polly Bjornson Stéphany, CFP®; Lindsay Harmon; and Brian Carlson, CFP®.
Being an excellent financial planner is as much about listening and building trusted relationships as it is Dow Jones averages and crunching numbers. Lisa Guzek Montagné lives this every day. She was drawn to the field of finance in 1986 because she liked the idea of helping people build a solid future. She, along with her LGM Wealth Management team, understands that financial decisions—whether it’s paying off debt, donating to charity, estate planning, saving for retirement, saving for college, stock option planning, understanding insurance policies (life, disability, long-term care), or taking advantage of tax strategies for a better rate on return—are interrelated.
“We help clients look at the big picture,” she says. “Comprehensive financial planning isn’t sales-driven, it’s about building trusting, mutually-respectful long-term relationships.”
Her team of highly-qualified professionals builds these relationships through asking the right questions, listening to clients, and getting to know what’s important to them—their personal and financial goals, their understanding of risk and risk management—before helping them create cohesive financial plans. Every quarter, they check in to make sure their clients’ investment strategies match their lifestyle goals, examining risks relative to rewards, and taking into account age and number of years to retirement. Lisa describes their process as “hands-on,” and cites a key strength of LGM Wealth Management as ongoing communication and follow-up.
Sometimes clients don’t realize there’s a gap or hole in their plan, and “addressing an area that needs immediate attention is crucial to our clients’ success,” she comments.
After all, markets move, tax laws change, and new investment opportunities arise. You can’t simply ignore these factors; you have to be pro-active.
Lisa and her team use a total wealth management approach—offering tax-advantaged investment strategies and portfolio analysis, as well as providing comprehensive financial planning services. Clients include everyone from young accumulators to corporations to retirees.
In order to get from Point A to Point B, it’s all about your personal savings, Lisa says. Pay yourself first. Be disciplined. And when it comes to financial planning, remember that slow and steady wins the race. The team at LGM Wealth Management will help you design a personalized comprehensive financial plan today for tomorrow’s financial security.
Contact information:
Lisa Guzek Montagné, CFP® • lisa.guzek@lpl.com • LGM Wealth Management • 952.853.2234 Northland Plaza • 3800 American Boulevard West, Suite 1400 • Bloomington, MN 55431 Securities offered through LPL Financial, Member FINRA/SIPC
Online Trading Academy: Become Your Own Financial Advisor
tradingacademy.com/minneapolis
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Left to right: Bob Rosenberg; Deb Rosenberg, CEBS, AIF®; Karen Johnson; PETER SCHMITZ, CFA, CFP®; SUSAN M. STILES, CFP®, AIF®, CHFC®; AND TINA NEWMAN.
Stiles Financial Services
stilesfinancial.com
The success of your financial future is directly linked to the competence of your wealth management advisory team.
At Edina-based Stiles Financial Services, Inc., Susan M Stiles, CFP®, AIF®, ChFC®, and her team understand the critical importance of an investment strategy that seamlessly aligns financial objectives and risk constraints. “Achieving this balance requires a distinctly different approach to managing money: a comprehensive, personalized, holistic wealth management process,” Susan explains. “Your dreams and goals are as important to us as they are to you.”
Personal attention defines all aspects of Stiles Financial Services, from a friendly, welcoming environment—a reflection of Susan’s former career in the hospitality industry—to understanding clients’ needs and wishes in order to customize financial plans (the management of client portfolios is not outsourced). “The foundation of our business is built on controlling oversight of client assets while implementing strategies designed to achieve results that align with formulated goals,” Susan explains.
In addition to the wealth advisory practice, the firm focuses on consulting and advisory services to retirement and pension plans for corporations, providing fiduciary oversight, investment monitoring and participant financial education.
Consistently elected a FiveStar Wealth Advisor and voted a “Best Investment Firm” by Sun Current readers, Susan and her team are gifted financial strategists who respect their client’s privacy and confidentiality. “We take your hard earned money seriously and manage it with care and integrity,” she comments. They can help put all the pieces of your financial plan in place, one that can evolve as your life changes, yet still fit perfectly with who you are.
Stiles Financial Services, Inc. • A Registered Investment Adviser
Southdale Professional Center, 6550 York Ave South, Suite 412
Edina, MN 55435 • 952-988-0452 • stilesfinancial.com
info@stilesfinancial.com
