What to Look for When You Need a Financial Professional

Financial Professional

It’s the first podcast of 2015! Brian and Bo are kicking off the New Year by giving out valuable advice on what to look for in a financial professional — be it a tax preparer, insurance agent, or financial advisor.

These are services nearly everyone uses (or should use!), and it’s important to connect with a financial professional who can actually provide value.

The guys walk you through the important questions to ask each of these individuals in order to make sure they’re in the right position to help you. This episode will also provide you with a better idea of how to vet each one so that you end up a happy client.

What Should You Look for in a Tax Preparer?

Brian tackles this question right off the bat, citing a wonderful article written by Kelly Phillips on Forbes: 11 Questions To Ask When Hiring a Tax Preparer.

Brian goes through a few of these questions and offers his perspective:

  • Knowing your tax preparer’s tax background sounds like a no-brainer, but you want to find out if they specialize in your situation.
  • Your tax preparer should be well aware of the intricacies of the credits and deductions offered by your state and local government. (Make sure your tax preparer will check on these things if you’re hiring one out-of-state.)
  • What do you want to get out of the transaction? Are you looking for just a tax preparer, who will have you in and out of the office within an hour? Or are you looking for someone that will also help you with tax planning for the upcoming year? What you need will help you determine which professional is right for you.

What Should You Look for in an Insurance Agent?

Everyone needs insurance of some kind — there’s no way around that. So how can we make sure we end up with a respectable insurance agent who is only recommending products that will truly benefit us?

Bo and Brian acknowledge that Amica, USAA, and Auto Owners are the three leading property and casualty insurance companies according to Consumer Reports. If you’re not with one of these companies, seek out an agent who will look out for you in the following ways:

  • They set annual reminders to check-in with you to see if you’ve gone through any big life changes recently.
  • They look for holes in your insurance coverage. (You want to make sure your agent is truly looking out for your best interests!)
  • They are well-established and have a history of success, as they will be less likely to recommend products based on commission.

What to Look for in a Financial Advisor

The guys also touch on what characteristics your financial advisor should have, and what questions you can ask them to make sure they’re a good fit for you.

You should always look for someone willing to work with you as your fiduciary. This means they always put your interests ahead of all others, including their own.

Bo and Brian also suggest asking the following before hiring an advisor to help you manage your finances:

  • What type of advisor are they? How do they receive compensation?
  • What is their motivation behind their recommendation? Are there conflicts of interest?
  • What’s the value proposition? (You shouldn’t pay a dime to anyone if you’re not getting value out of it.)
  • What’s their wealth management philosophy?

What to Do If You Need a Financial Professional on Your Side

Always do your due diligence and don’t be afraid to ask questions when looking for a financial pro to help you with various money issues. The right professional will make you feel comfortable and put your needs and interests ahead of anything else.

Could you use help from a financial advisor? You can always reach out to the Money Guys to help get you on the right track — Bo and Brian are currently accepting new clients.

Email brian@money-guy.com or bo@money-guy.com if you’d like the pros behind The Money-Guy Show in your financial corner.

 

Knowing When to Go Pro

Hiring a professional financial planner could possibly be the key that unlocks the door to your financial success.  At the same time, choosing the right advisor to work with is an important decision that can often seem overwhelming.  In today’s show, we discuss the services that planners will and will not provide as well as key things to look for when hiring a pro.

In the March edition of MoneyAdviser, Consumer Reports outlined what typical fee-only planners will and won’t do for their clients:

What they will do:

  • Help you figure your net worth:  Typically, a planner will have the client gather the necessary data and then create a statement to uncover other planning opportunities, such as insurance analysis or estate planning.  (Do-it-yourself tip:  Collect current statements for all assets and liabilities and use an online net worth calculator, such as Mint or Yodlee, to determine your net worth each year.)
  • Advise you on 401(k) investments:  Your planner should be looking at all the pieces of your financial puzzle, including your 401(k) to ensure that your saving and investing goals line up across the board.  (Do-it-yourself tip:  See if your 401(k) plan sponsor offers access to investment guidance or check out the online retirement-planning program, Financial Engines, for additional support.)
  • Help you invest a lump sum:  A planner should be able to offer tax-efficient investment advice to their clients, as this is a core activity of financial planning.  (Do-it-yourself tip:  Use Morningstar software to research mutual funds and stocks for your portfolio.  Also, check out Bo’s Money-Minute about investing in a lump sum vs. dollar cost averaging.)
  • Determine if you’re properly insured:  Your planner should be able to evaluate your insurance needs, as well as refer you to an agent that can provide the coverage.  (Do-it-yourself tip:  Do as much research as possible and shop around for the best rates.)
  • Assess if you’ve got enough to retire:  A planner can determine whether you are on track for retirement or if you need to explore other options, such as working longer or changing your lifestyle.  (Do-it-yourself tip:  Assess your potential income sources, including Social Security, and use an online tool to calculate where you stand.  Consumer Reports recommends T. Rowe Price’s Retirement Income Calculator and Analyze Now’s Free Retirement Planner.)
  • Coordinate your retirement income:  Planners can determine the best method for drawing funds from your various retirement accounts, while considering tax consequences.  (Do-it-yourself tip:  Consumer Reports advises that unless your retirements consists entirely of Social Security and a pension, you might want to consult a professional on this one.)
  • Help you plan for college funding:  A planner can guide you on the best ways to finance your child’s education.  (Do-it-yourself tip:  Visit www.collegeboard.com, www.savingforcollege.com, and www.finaid.com for additional resources.)

What they won’t do:

  • Help you pay down debt:  As a general rule, fee-only financial planners refer such clients to a debt counselor or a bankruptcy attorney.  (Do-it-yourself tip:  Contact the National Foundation for Credit Counseling if you need help with debt.)

The gray area:

  • Help you control your spending:  While many planners recommend following a budget, it’s not cost effective for you or the planner to spend hours together developing a detailed budget.  Most planners are interested in overall cash flow and will recommend cutting back if needed.  (Do-it-yourself tip:  Create a spreadsheet or utilize budgeting software like Quicken, Yodlee, or Mint.)
  • Create an estate plan for you:  Planners can help you decide the structure and tax efficiency of your estate, but an estate-planning attorney will be needed to draw up wills, trusts, and end-of-life documents.  (Do-it-yourself tip:  Contact an attorney to prepare or review your documents.)

If you decide that hiring a financial planning professional would be beneficial for you, the following credentials should stand out to you:

  • Certified Financial Planner (CFP):  holder has passed a 10-hour exam, has at least three years’ financial planning experience, and has completed an approved course of study.
  • Chartered Financial Consultant (ChFC):  requires eight college-level courses in financial planning and 30 hours of continuing education every two years.
  • Certified Public Accountant/Personal Financial Specialist (CPA/PFS):  CPA with specialized training in personal finance.
  • NAPFA – Registered Advisors:  holder meets strict education and professional requirements for membership in the National Association of Personal Financial Advisors, for fee-only planners.
  • Chartered Financial Analyst (CFA):  holder completes a series of three six hour exams and has four years of qualified work experience.

Hopefully this information will be helpful if you are considering hiring a professional to guide your finances.  Check us out on Facebook, YouTube, and please leave any questions or comments below!

 

Links to other things mentioned in today’s show:

Is This the End of Popping Vitamins?
On the Job, Beauty Is More Than Skin-Deep