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Submitted by: Alan Goldfarb
Selecting a Financial Advisor may be one of the most important decisions you can make regarding the long-term financial security of your family, for this and future generations. Making your money work for you is not magical. It is a combination of years of experience, development of a long-range plan, and the ongoing monitoring and updating of that plan. It is not science. It is not art. It is a combination of both, and that is what we, and our experienced team of Financial Advisors, do.
"There is more to financial planning than buying a basket of no-load mutual funds, and "paying your financial adviser so that they can stay in business long enough to help you, is not a criminal act." Well, I agree planners should be compensated, but on a fee basis.
Commissions present too many conflicts of interest, too many temptations for unethical behavior and too much opportunity for abuse. Don't get me wrong, there are a lot of ethical brokers. Unfortunately, there are some not-so-ethical brokers who love taking money off the top of a client's portfolio for doing little or nothing.
The truth is that today most investors are forced to be do-it-yourself investors. Why? Because most advisers don't want so-called "average investors" as clients. So you're stuck doing it yourself. But the day may come sometime in your life when even the most hard-core do-it-yourselfers need a pro to help sort things, for any number of reasons:
You're too busy making money in your business and don't need distractions
You have temporary self-doubts and psychological blocks
You're going through a divorce or dissolution of a business
You think you're doing everything right, but want a second opinion so how do you pick one?
The harsh truth is that the best source is always a recommendation from a relative, or a friend, or an advisor who has had long-term success with a financial planner. You should consider hiring a fee-based planner, someone who is not a salesperson earning commissions from the sale of funds, stocks, annuities, insurance or loans.
In addition you should get an estimate before signing any engagement agreement. Questions to think about when you need a planner What can a financial planner do for you that you can't do for yourself? Here are some items to get you thinking:
1. Goals: How realistic are you about your goals? How much money are you really spending? Are you honest with yourself about all elements about retirement savings?
2. Strategies: Even if you know your goals, what are the best strategies? What about life insurance? How does your home mortgage fit in? Or annuities? Yes, there is more to your financial plan than just buying a bunch of no-load funds.
3. Priorities: Okay, you can't do it all right away. First things first. But what comes first, second? What's deferred? Budget each step. New house. Kids' college. Retirement. Things take time. Maybe a pro can help you take things in order, slowly.
4. Research: Do you really have the time to research the right products to fit each of your goals and strategies? Do you even know where to get all the information? What's important, what's a hustle? How to put it together?
5. Comprehensive: Okay, you know you can work separately with your current broker, insurance salesman, CPA and banker, but can you put together the best overall plan?
6. Best deals: Assuming you have a workable plan, can you identify the best products for the lowest prices? Do you have the experience to get the lowest-cost options?
7. Objectivity. Once you focus on a particular aspect of your plan, like buying a new home or the best time to retire, emotions often get in the way of rational analysis. An independent outside voice can be worth its weight in gold.
8. Action. Like keeping at an exercise schedule or diet, once you make a decision, you may need a coach to push you when the going gets tough, through things like regular savings, excessive credit card debt, details in purchasing a home and not chasing hot funds.
9. Mediation. How do you balance the conflicting needs of you and your spouse? A good financial adviser should have experience in resolving delicate situations.
10. Bottom line: Yes, you want it all, can you get it? After all is said and done, is this plan going to help you make the money you need to meet your goals, buy that house, get the kids through college or help you retire in a comfortable lifestyle?
In the final analysis, no matter what you decide, remember the immortal advice of Jane Bryant Quinn: "Most of us don't need professional planners. We don't even need a full-scale plan. Conservative money management isn't hard. To be your own guru, you need only a list of objectives, a few simple financial products, realistic investment expectations, a time frame that gives your investments time to work out, and a well-tempered humbug detector, to keep you for falling for inappropriate sales pitches.
Remember: "Don't put off decisions for fear you're not making the best choice in every circumstance. Often, there isn't a best choice. Any number of several will work."
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