Qualifications matter and can be checked
In the financial world, it seems that just about anyone can call themselves a financial advisor. Insurance agents, investment brokers, lawyers and Certified Public Accountants can all call themselves financial advisors or financial planners. While it’s true that anyone with reasonable intelligence can study and become a financial advisor, not all claiming to offer financial advice are competent and caring enough to deliver it. At face value, it may be unwise to accept someone’s claim that they are a financial planner. You need to do a little research and due diligence.
Start with an experience check. Today, you don’t need to take someone’s word for their experience. Look at their LinkedIn profile and other social media sites they use. It should be evident by their postings where their interests lie. Ideally you’ll get a glimpse into what makes this person tick and their areas of expertise.
After the social media scan, go to Finra.org’s broker check* section and look up their regulatory background and experience. This site is reliable in terms of the planner’s relevant experience and background because it’s a potentially finable offense to misstate the facts on this disclosure document. If the person is not registered with the regulatory authorities as a financial planner, your conclusion should be simple.
Next, ask about the anticipated outcomes. You may ask to see what the planning document looks like. Many planners simply print out pages with lots of numbers that may or may not be meaningful.
Ask to see how the recommendations are delivered. Are they delivered clearly and in writing? After you see or learn about the deliverables, decide if the proposed service is comprehensive enough to discover matters that you hadn’t previously considered.This step is critical because the tendency of those not committed to the entirety of the planning process is frequently a short cut through the tough stuff (like tax planning or intergenerational business issues), with more emphasis on the insurance or investments – depending on the culture of their firm or their background.
Taking the first step may not be easy. Many are satisfied with our lives and the limited advice that we get. Generally, things are good for many, we have income, investments, family, hobbies and friends. But just like medical doctors are frequently asked for a second opinion, it may wise for you to seek corroboration on your overall financial situation.
If you’ve got ethical, comprehensive guidance, not much should be found. But if you’ve got professionals hiding behind the financial planning moniker simply investing your money or selling you insurance, there may be significant gaps in your plan. If you’ve got outdated estate plans, uncertainty about beneficiary elections or standing without a business succession plan, start looking for your second opinion.
*Note that broker check only applies to those individuals that are registered with a broker/dealer to offer investments. This does not apply to all insurance agents, CPAs and lawyers.