I was reading SmartMoney.com‘s article “10 Things Financial Planners Won’t Tell You” and I thought hey I’m not a financial planner so I will tell you my thoughts, so here is their list with my commentary. Remember, I work very closely with financial planners and they play an important role in your financial futures, as do attorneys, accountants, insurance agents, money managers, etc.
1. “I got this gig on a whim.”
When I started in this industry 5 years ago, I thought I wanted to be a financial planner. As the article state, financial planner has really become a generic title to describe anyone that could be a bank employee, insurance agent, stockbroker, etc. I realized that I couldn’t be all of these people so I decided to specialize can be a financial coach. Read my blog post “What I Do…”
As for the CFP it definitely can help you distinguish between those that are in the business temporarily. I work closely with CFPs. My mentor and colleague, Mike Papaz has his CFP, CLU, FBS, AEP as well as 28 years of experience. It all helps but what doe sit really mean? I’m a little worried that the CFP is becoming a little commercialized. I am focusing on my Masters.
2. “I’m a jack-of-all-trades and master of none.”
Some of the biggest mistakes I’ve seen people in the financial industry make is that they think they know everything. It’s as though they are threatened by other professionals being involved in the process. If the process is truly about the client, aren’t more minds better than one? I think the strength lies in a team approach where you can coordinate the work of different industry professionals such as accountants, attorneys, financial planner, money managers, insurance agents, etc. Coordination is key; having your financial products and services working together to accomplish more.
3. “I have ghostwriters draw up your plan.”
This amazes me but in no way surprises me. A lot of people in this industry have very little understanding of how to do the best thing for the client. They use a cookie cutter approach. How do you make a cookie faster? Have someone else mix the batter for you. My advice, have them walkthrough the program they use in front of you. Have them change your retirement age and see how it affects things. They’ll only be able to do it in front of you if they know and understand how to do it themselves.
4. ”I’m a high-pressure shill in disguise.”
I’m not going to sit here and say work with a fee-based planner as the article seems to do. I think they are a great fit for the right situation but definitely not every situation. To me, a fee and a commission are the same. You get paid on business that you do. The key is financial planners who are limited in what they can offer. Some can only offer proprietary products and services while others can offer anything. Be weary of the guy that shows you a high percentage of products and services from one company. Just as one person can’t be great at all things neither can one company.
5. “Am I ‘fee-only’ or ‘fee-based’? Um, let’s not split hairs.”
People can be greedy. They want their cake and eat it too. The key here is ask. Just as they ask you how you make money, ask them. Make sure you are comfortable with their answer. If you don’t trust it or feel uncomfortable in any way find another advisor. I make it a rule of mine to tell everyone, the first time I sit down with them, how I am compensated. Lay it out on the table, there should be nothing to hide.
6. “Once I’ve done the plan, I’m outta here…”
This might be the hardest thing on the list to see coming. My advice is to watch their contact early on in the relationship and have a conversation about it. Are they confirming appointments? Are they following up when they say they will? Are you able to reach them with questions? Test them out. These are early signs of what will come later. Things are changing so fast in today’s economic world you should be talking with your financial people at least every six months. I would recommend no less than quarterly.
7. “…especially if you’re not so well-to-do.”
They should always want to help. You can’t always help everyone. I try to be completely upfront and will be more than happy to recommend someone else. Even if a person decides my work is not quite what they are looking for. I’ll do my best to introduce them to someone I know that fits their need. Isn’t that what it’s about?
8. “Confused? That’s the point.”
This is the idea behind this blog. There is so much confusion out there in the financial world. It starts with the media outlets all the way down to the planners you sit down with. My hope is that this blog will help shed some light on things for you. I encourage and embrace questions and comments. Please fire away.
9. “In fact, I don’t even understand your plan.”
I’m not familiar with financeware.com. I went to the website and was unable to find the free service. I don’t usually recommend free calculators and such on the Internet. I find that they have a very narrow fit. If you are looking to coordinate your financial world it can’t be done with one calculator or one simulation. This is also the scariest thing on the list for me. This is where people can really get put in bad situations when no one fully understands what is going on. It doesn’t have to be that way. If you are looking for a professional ask around someone will no a good one and if they don’t, ask me.
10. “Good luck busting me for malpractice.”
I think it’s a great point to report wrongdoing even if you aren’t going to pursue it. This is the age of information and bad news travels fast. Let people know so that they don’t fall victim as well. I’ll be interested to see how the regulations will change in the coming years with some of the scandals we’ve seen lately.
What are your stories? Do any of these strike a cord with you? How have you dealt with it? People out there can really learn from your experiences, share away…
Related posts:
{ 1 comment… read it below or add one }
Hi. I like the way you write. Will you post some more articles?