How to Interview a Financial Planner in 2022


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The financial world is a complex one to navigate. Budgeting, tax planning, employee compensation like performance-based incentives and stock options, investing opportunities, the various types of retirement accounts—it can feel overwhelming! These topics (and many more) collectively underscore the value of seeking out a financial planner with an expertise that's relevant to your situation.

If you're considering the transition from going-it-alone with your finances to working with a financial planner, here are a few key points to research and consider.


Standards of Care for Financial Professionals

To use certain titles and receive compensation for providing financial guidance, a financial planner may need to pass exams, meet ethical standards, have relevant work experience and/or undertake continuing education. Other titles, however, may be obtained with little time, effort and experience. That's why it's important to look beyond the title to determine if someone is able to help you with the financial services or products you need.


Financial planners registered as an investment adviser or with a broker-dealer have obtained registrations and licenses granted by state or federal regulatory authorities. Working with a financial planner who is registered with or licensed by state or federal authorities generally affords investors certain legal protections.


Life Story Financial is a registered investment advisor (commonly referred to as an "RIA") under the State of Colorado's Department of Regulatory Agencies Division of Securities.


The Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA) put together this useful guide that provides details about various job titles, as well as a list of questions you can use to learn more about them.


1. Understand the Various Compensation Options

Financial planners are compensated in different ways:

  • Advice Fees: These might be offered as hourly fees for work performed, a one-time project fee or a percentage of your investments.

  • Transaction Fees: These are charged by the custodian (e.g. Fidelity or Schwab) when an advisor buys or sells investments on behalf of a client. In general, these range from $0 to $50 per trade depending.

  • Expense Ratio: This is charged by a mutual fund or exchange-traded fund (ETF) to cover the operational costs of the fund. These can range from 0% to 3% or more (!) per year.

It's important is to make sure you have a clear, up-front understanding about how the planner is compensated and how much and when you can expect to pay them. This is information that I include in my firm's introductory packet, as well as on the website. The more transparency there is around how a financial planner is earning their fees, the better informed you are as a consumer.


2. Identify the Value a Professional Brings to the Table

Managing your financial affairs and the emotions that can come up with them is sometimes complex and challenging. A financial planner dedicated to the profession should be able to:

  • Help you identify your most important life goals

  • Evaluate and assess your financial situation

  • Identify what might keep you from achieving your goals

  • Offer advice with an action plan on how to make improvements

Many planners will present you with a written financial plan to help you pursue and adhere to your goals. The financial plan should be created such that you can readjust tactics should your financial circumstances change. More importantly, the plan should be something that's relevant to you, easy to understand, even easier to implement, and offered without judgment.


Walking away with a dense, 50+ page plan packed with detailed analyses, graphs and charts might seem impressive. But if the sheer volume and level of detail overwhelms you, chances are it'll end up filed away, never to be seen again. And where's the value in that?


My firm's website includes a description of my life-focused financial services along with a sample financial plan to give visitors an idea about what they can expect from my Financial Planning Experience. There's even more detail included in my firm's annual regulatory filings, which consumers can review online.


3. Consider Questions to Ask During an Initial Meeting

When interviewing a financial planner, it’s helpful to understand the person’s background and training to determine whether there is a good fit for you. Important questions to ask include:

  • Why did you become a financial planner?

  • What is your training and background? What about ongoing education?

  • Can you provide me with a list of services you provide (i.e. accounting, tax planning, retirement planning, estate planning, etc.) and explain how you provide them?

  • Do you offer your clients general or specific financial recommendations?

  • How do you help your clients implement your advice or recommendations?

  • How do you communicate with your clients (method, frequency)?

  • What types of clients do you specialize in working with? How many do you serve?


4. How to Prepare Yourself for an Initial Meeting

When you have your first meeting, be transparent about your life, your needs and your financial goals. This may not be as as easy as it sounds. A skilled and empathetic planner should be able to ask you questions that help you clarify your goals and prioritize what's important for you to accomplish.


For example, a few of the questions I generally ask potential clients include:

  1. Are you or your immediate family experiencing or expecting any life changes?

  2. What's the most important financial goal you have today?

  3. What's your top financial issue today?

  4. What's important about money to you?

In preparation for your meeting, ask the planner what documents you should bring if they haven't already told you. Examples may include your most recent tax return and investment account statements, your Social Security benefits statement, a copy of your will and a summary of your insurance policies.


Finding a Financial Planner is a Long-Term Decision

By partnering with a financial planner, you're making a commitment to take better control of your finances and to create a structured path toward a potentially more confident future.


Make sure you find someone who will not only educate you (in language you can understand!) and help you work toward your financial goals, but with whom you'll enjoy spending some time with throughout each year. It's a long-term relationship that should be well worth your money and time investment!


If you're interested in learning more about what it's like to work with me, you can review my how to get started process here or schedule an intro call here.


 

Important Disclosures

Advisory accounts may not be appropriate for every investor. A brokerage account may be more appropriate for every investor. A brokerage account may be more appropriate if you prefer a buy-and-hold strategy for a long period of time, and/or prefer to make the investment decisions yourself, seeking a financial advisor only to provide occasional recommendations and execute orders.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks, including possible loss of principal.