What Should You Know Before Hiring a Financial Advisor?
Last week, XY Planning Network and a number of our member advisors co-hosted Experian’s weekly chat on Twitter. In case you missed this fun event, we’re recapping the highlights for you here.
Today’s chat ft. a great panel of financial planners. Follow the convo on Twitter and YouTube at http://t.co/QQ1VerZ3yj #creditchat
— Experian (@Experian_US) March 18, 2015
With network co-founder Alan Moore, 5 XYPN members provided their tips, ideas, and insights:
- Katie Brewer (@KatieYRL)
- Sophia Bera (@SophiaBera)
- Daniel Wrenne (@WrenneFinancial)
- Mary Beth Storjohann (@MaryBStorj)
- Erik O. Klumpp (@ErikOKlumpp)
Take a look at what we covered and learn what you need to know before hiring a financial advisor.
Why Do People Wait to See an Advisor — and How Can Advisors Help?
The first two questions posed in the chat covered why some people have never worked with a financial advisor, and why they should make time to see a pro.
- Why have many people never seen a financial advisor?
- Why is seeing a financial counselor helpful? When is a good time?
Here’s what our members had to say:
A1: I think there is the misconception that you have to be "rich" to work with a financial planner, which defintely isn't true #creditchat
— Alan Moore, MS, CFP® (@R_Alan_Moore) March 18, 2015
@Experian_US A1 Sometimes people are ashamed of their financial baggage. You don't need to be! #creditchat
— Katie Brewer, CFP® (@KatieYRL) March 18, 2015
Financial Planning is not just for Boomers anymore! #creditchat
— Erik O. Klumpp, CFP® (@ErikOKlumpp) March 18, 2015
A2: The best time to work with a financial planner is BEFORE you're in money trouble. #creditchat
— Mary Beth Storjohann (@marybstorj) March 18, 2015
A2: People don’t plan to fail, they fail to plan! A planner will help you get it done! #creditchat
— Wrenne Financial (@WrenneFinancial) March 18, 2015
What Qualifies Someone as a Professional Advisor?
Many people simply don’t know what to look for when it comes to finding a true professional who will work in your best interest and provide you with the best service.
XY Planning Network makes it easy, as all our advisors are certified, have experience, and have sworn to uphold a fiduciary oath.
But not all outlets are so transparent and concerned about the wellbeing of people seeking advice. Here’s what qualifies someone as a true professional:
A3: The CFP(r) mark is a big one. Also look for real world / industry experience beyond the educational background. #creditchat
— Mary Beth Storjohann (@marybstorj) March 18, 2015
A3: The gold standard for financial advisors is the CFP® designation. #creditchat
— XY Planning Network (@XYPlanning) March 18, 2015
"Financial Planning" doesn't always mean "Investment Management". #creditchat
— Erik O. Klumpp, CFP® (@ErikOKlumpp) March 18, 2015
We also talked about what to look out for with chat question #4: What types of financial advisors should you avoid?
@Experian_US A4 If you feel like you're being pushed, sold or talked down to, run away & find a better advisor. #creditchat
— Katie Brewer, CFP® (@KatieYRL) March 18, 2015
A4: Avoid those without designations, who are pushing a product and/or aren't open about how they're compensated. #creditchat
— Mary Beth Storjohann (@marybstorj) March 18, 2015
A4: Avoid sales people. If they won't sign a fiduciary oath, run away! Here is one to have them sign: http://t.co/Wn9uCIcrmj #creditchat
— Alan Moore, MS, CFP® (@R_Alan_Moore) March 18, 2015
When a financial planner says he doesn’t need to be a fiduciary. #creditchat pic.twitter.com/5x15Y95yOo
— Mike Delgado (@mikedelgado) March 18, 2015
What Does a Financial Advisor Actually Do for You?
Many people don’t understand the wide array of services that financial advisors can provide to you. At XY Planning Network, our members focus on just that: providing service. There are no commissions, no hidden fees, and no product sales. We’re all about comprehensive financial planning.
A5: Budgeting help, debt repayment plans, maximizing company benefits, choosing 401(k) investments, goal setting and more! #creditchat
— Sophia Bera, CFP® (@sophiabera) March 18, 2015
Q5: Planners help you gain clarity on what you want to accomplish with your money and then help create a plan on getting there. #creditchat
— Mary Beth Storjohann (@marybstorj) March 18, 2015
Q5: Financial Planners go beyond just strategy. They're also sounding boards, accountability partners and coaches. #creditchat
— Mary Beth Storjohann (@marybstorj) March 18, 2015
@Experian_US Q5 Financial planners can cover budgeting, short & long term planning & identify any potholes. #creditchat
— Katie Brewer, CFP® (@KatieYRL) March 18, 2015
A5: I don’t know about you guys but I end up providing lots of marriage counseling #creditchat
— Wrenne Financial (@WrenneFinancial) March 18, 2015
How Do Financial Advisors Get Paid?
There are a variety of ways advisors can get paid. Our members are fee-only and most offer a monthly subscription model (meaning you pay a monthly bill, just like any other service you pay for monthly) or work on an hourly basis. You can search for an advisor based on how they are paid in XYPN’s Find An Advisor portal.
With question 6 in the chat, our members provided more information on compensation.
A6: Good financial advisors should only get paid by you (the client) directly through fees. We call that being fee-only #creditchat
— Alan Moore, MS, CFP® (@R_Alan_Moore) March 18, 2015
Q6: Find a planner that is paid for working in your best interest (fee-only), not by another company for selling a product. #creditchat
— Mary Beth Storjohann (@marybstorj) March 18, 2015
A6: I charge an initial planning fee followed by a monthly subscription for my financial accountability program. #creditchat
— Sophia Bera, CFP® (@sophiabera) March 18, 2015
A6: My firm charges fees for financial planning hourly or via monthly retainer #creditchat
— Wrenne Financial (@WrenneFinancial) March 18, 2015
Know the difference between "fee-only" and "fee-based". Fee-only is paid by YOU. Fee-based can also receive outside commissions. #creditchat
— Erik O. Klumpp, CFP® (@ErikOKlumpp) March 18, 2015
Final Tips for Hiring a Financial Planner
A10: Put a little work front end work into it – seek referrals and talk with several before locking in #creditchat
— Wrenne Financial (@WrenneFinancial) March 18, 2015
@Experian_US A10 Ask friends, research financial planners on @XYPlanning, @NAPFA, @FPAssociation #creditchat
— Katie Brewer, CFP® (@KatieYRL) March 18, 2015
A10: Don't limit yourself to location. Choose a virtual planner who understands your unique needs. http://t.co/4QBrpytbZZ #creditchat
— XY Planning Network (@XYPlanning) March 18, 2015
Be sure to join in the weekly tweetchat hosted by Experian by following @experian_us and participating with the hashtag #creditchat. Chats happen each Wednesday at 3pm EST.
You can catch XY Planning Network (@xyplanning) and more of our advisors back on the chat on May 6th, when we’ll discuss Frugal Ways to Go Green. Hope to see you there!
