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Signs of a Good Financial Planner Thumbnail

Signs of a Good Financial Planner

I saw an article recently on signs of a good financial planner. I figured I would take my own spin on this. While I point out the signs of a good financial planner, I will let you figure out the signs of a bad advisor. With that, let’s dig into them. 

The Focus is on Financial Planning:

  • Financial plans are worthless. There. I said it. There are several reasons for this. First, they are wrong and outdated as soon as created (dollars change). Next, with the proliferation of “financial planning” software anyone can create a financial plan. And too many non-CFPs create them.
  • More importantly, the focus needs to be on the process of financial planning itself.
  • I have been a CFP (Certified Financial Planner) for years. It wasn’t until the last few years I really felt I had my arms around a truly awesome financial planning process.
  • Getting a CFP is no joke. However, until I took the time to get this advanced training, I felt like I had the ingredients for a great meal, but no recipe.
  • Financial Planning done right is taking all the parts of your life and putting them together in a way that makes sense for you and it has to be updated frequently as life happens fast.

 Tax Returns are Reviewed and Tax Planning is Year-Round:

  • I have shared before I started a million years ago at Merrill Lynch. Never did I hear a trainer or any senior advisor say anything about reviewing tax returns or even discussing taxes. Heck, I started with a CPA who wasn’t allowed to even mention his credentials to clients.
  • You have more control over your tax situations than what the market does, but people fixate on the latter.
  • Tax planning needs to be done year-round. Last year was a great example. The market was down 10% at one point. If your advisor waited until the end of the year to do some tax planning it was too late as the market was up over 20% by then.
  • Actually, the above can be said about every year.
  • I read a comment in an online forum recently from an advisor who likes to consider himself a “big thinker” in my world. He said he does tax loss harvesting in June and December, regardless of whether the client needs it. I have seen advisors say a lot of stupid things, but this may be one of the top 3.
  • Finally, it’s not what you make; it’s what you keep! This is critical in my world as I cater to physicians.

 You Meet Once a Year:

  • To quote the great philosopher, Ferris Bueller – “Life moves pretty fast.”
  • Meeting once a year with your advisor is standard in my world. However, how much can change in your world every few months let alone 12 months?
  • I meet with clients quarterly for a few reasons. One, we cover a lot over the year. Next, I operate under a 12-week year mentality. Also, a lot can happen in 3 months. Finally, it is what I would expect with my advisor.
  • And don’t get me started on when a client has to call the advisor to request the appointment. The last thing clients and I do in each meeting is set the next meeting.

 Workplace Benefits and Plans Are Brought Into Everything:

  • Many advisors do not spend time with clients doing simple things like reviewing workplace benefits, such as Health Savings Accounts and even 401k plans.
  • The reason is simple – they don’t get paid on them.
  • The bulk of my clients are still working and a good chunk of their assets are in workplace plans. This cannot be ignored and we are diligent in bringing them into the full financial planning picture. 

Compensation and Fees are Clear:

  • You know exactly what you are paying your advisor and even how much your investments cost.
  • I won’t get on my soapbox about the proper way to pay your financial advisor.
  • I will just share that my annual fee is a flat one and includes full financial planning and investment management (although I can’t get rid of charges from investment companies like Vanguard and SEI).
  • My fee of $2,500 a quarter is based on my knowledge, experience and service level. All my clients know exactly what they pay me.

 Continuous Education:

  • As mentioned earlier, becoming a Certified Financial Planner is no joke. The requirements include having at least a Bachelor degree, minimum years of experience, passing a comprehensive exam (it was a two-day exam back in my day), and lots of continuing education.
  • However, the Continuous Education I am referring to is good advisors go out and seek additional training to benefit their clients.
  • For example, the advanced financial planning training I went through a few years ago. Also, right now I am in the midst of advanced tax planning training (more on that soon).
  • If the only training your advisor goes through is how to improve their sales skills so they can ask to be introduced to your family, friends and coworkers, well…

 I am officially done. This went longer than I planned and I could go on. I do appreciate you sticking around to the end and hopefully picked up a point or two.

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