Outside of a portfolio’s rate of return, it’s often easy to overlook the value that objective, client-focused financial planning brings. Although many financial professionals offer “free” services, do you stop and ask yourself “Hmmm, I wonder how he/she is paid if it’s not by me?” (source).
As objective financial planners, we fully support the “you get what you pay for” belief. Below is a list of just a few of the values we believe objective planning offers. Please feel free to let us know your thoughts on any of the following.
1. An independent financial planner helps protect you from financial salespeople.
According to Bob Veres, “…the Wall Street firms that pretend to offer financial planning guidance are seldom (if ever) looking out for the best interests of their customers.” Unfortunately, as a consumer in our industry, it’s not always easy to recognize when there’s an underlying motive or incentive behind the financial advice you receive.
Brokers might have business cards with the title of “Financial Advisor,” but in reality are often simply salespeople who are paid by their company to sell you as many products as possible. Unless they are a fiduciary, they are expected to do what is in the company’s best interest, not what is in your best interest. They are rewarded when they meet sales targets, and bonuses are often based on the clients they sign (source).
Since the financial marketplace can be extremely complicated, it’s usually hard for a layperson to know when there are better alternatives than the “opportunities” being presented (Veres, 2015).
When selecting a trusted financial planner, we suggest looking for a Certified Financial Planner® who also holds themselves out as a Fiduciary. When it comes to ethics and professional responsibility, CFP® professionals are held to the highest of standards. They must uphold the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism, and diligence as outlined in the CFP Board’s Code of Ethics. Fiduciaries must always act in their client’s best interests.
2. An independent financial planner gives you room to breathe.
An independent financial planner should not be in any hurry, offering you plenty of time to contemplate your options, do your research, ask ample questions, and come back to visit another day. An independent financial planner should also let you know if the service you need is within their purview or refer you to another professional if it is beyond their capacity. You should be told, before any work begins, the cost and scope of such work to eliminate any surprises and allow you to evaluate whether what is being offered fits your budget and addresses your needs.
When you meet with a financial salesperson, you might feel pressured to act right away. There may be some extra incentive to sign a contract before you leave the office or you may become uncomfortable as the result of a strong sales pitch. Our advice to you is to run if you encounter this kind of scenario. Make this about your timeline, not the planner’s timeline.
3. An independent financial planner helps you look at the entire picture.
When selecting your trusted planner, be sure to find one that is reviewing many aspects of your financial life. Is the planner asking about your goals, assets, income, debt, family relationships, various types of insurance coverage, investments, health, business and estate planning, and tax planning? Or is the planner simply focusing on one area?
Because each piece of your financial puzzle can work in conjunction with the other pieces, it is vital to look at the entire picture.
4. An independent financial planner is a person who will cheer you on in this game called life.
As Bob Veres rightly states, “The problem for most consumers is that there is no voice in their environment advising them to pay themselves a fair percentage of the income that they earn. Instead, they’re bombarded by messages which make powerful arguments to do the opposite: to buy this, that, or something else. The entire advertising community conspires to take those dollars out of their hands before they ever hit an investment account.”
Who else will act as the voice in your environment to encourage you to pay yourself first? One of the most important roles of an independent financial planner is to assist clients in outlining their goals and break it down to manageable bites to help reach those goals. The next goal is to hold their clients accountable and save them from outsider’s agendas. Wouldn’t it be nice to have the “….comfortable knowledge that you can call an expert for advice on virtually any financial subject, and you’ll get an answer that is not tainted by a sales agenda”? (Veres, 2015)
Everyone is interested in finding different qualities in an independent financial planner. This list is simply the beginning of the value that can be provided. Here, at Sharkey, Howes & Javer, we are fee-only Certified Financial Planners® that put your best interest first. If you are interested in a complimentary consultation, don’t hesitate to call us at 303-639-5100.
