Hiring a financial planner for the first time can be an extremely intimidating process. How can you know who to hire? Everyone you speak with is probably saying something different about what you should be looking for.
“Find someone at a firm name you recognize like Wells Fargo or Merrill Lynch” right after hearing “Definitely don’t hire someone at a big bank, they’ll rip you off”. Yeah, opposite advice, that’s super helpful.
“Find the cheapest person you can” hmmmm I wouldn’t buy the cheapest car available….that’s just inviting problems, could hiring an advisor work the same way? If I cheap out will I get a lemon? Do I want to risk having a lemon managing my entire retirement fund?! But then how do I know where to splurge when I’ve never had one before?
Or maybe you’ve even heard “Oh, you don’t need a financial planner. You can do that all on your own. The information is available online.” Well, that might be true, but if you’re like most people the information available online is either extremely confusing to you, or it starts to sound like the teacher from Charlie Brown after about 5 minutes. Can you say BORING?
So, how DO you go about finding the right financial planner for you?
The recipe for finding the right fit for a financial planner begins before you start interviewing candidates. (Interviewing? YEP! You are the boss, looking to hire someone to do work for you!) Start by thinking about what feels important to you in your ideal advisor. This could be different for everyone, and there are no wrong answers.
- Do you prefer someone who has an office you can visit, or are you more comfortable with online meetings?
- Is there a specific age of advisor you would prefer?
- Do you have specific needs your advisor should have expertise in, such as LGBTQ+, blended families, debt payoff, etc.?
- Do they prefer strawberry ice cream or rocky road? (These things can be important)
Remember, anything goes here. This is a list about what is important to YOU. This list shouldn’t be too long, but it should include the things that you feel are critical for your personal success in the relationship you will have with your financial planner. Use these criteria to begin your search and develop a list of 3-5 candidates to interview.
After determining the qualities you absolutely need in a planner, there are 3 main things you should look for when interviewing your candidates. I call them the 3P’s!
You’ll Ask: What is your financial planning process?
Every financial planner you interview should have a clear, repeatable process they follow for all their clients. While your situation is special to only you and you should be receiving advice and recommendations based on your specific situation, the method the financial planner uses should be really close to the same for every client. They should have a specific method for discovering your needs, organizing what they learn about you, applying their expertise to your situation, and delivering their findings to you in an accessible manner.
Having a process in place shows you that the person you are hiring has experience, organization, and competency.
You’ll ask: How much are your services?
This is where I want you to really pay attention to how they answer this question in the interview. The answer, ideally, will be clear, concise, and specific. You wouldn’t buy a shirt at a store if the tag said “It depends” and you only found out after leaving the store where it showed up on your credit card statement, and you shouldn’t buy financial advice that way either. The financial planner you are interviewing should have the ability to clearly state how much they charge for their services, how you will pay them, and when that payment will be due. Please read here to learn more about the ways financial professionals get paid.
Be very, very wary of people who say they will take you on as a client for “free”. This is their job, and it is highly unlikely you have found someone who is giving away their time out of the goodness of their hearts instead of spending it with their family or friends. Advisors who offer “free” financial planning often do so as a precursor to high commission products they would like to sell you, or the financial plan will be of low quality. If they aren’t willing to discuss their fees using specific terms that you can understand, it is best you move on to a different advisor who will.
It is also important to note what you will be receiving for the price you pay. Some financial planners go into more detail than others, some offer a financial plan that you must implement yourself or pay more for help with follow-up, some charge more for managing your investments in addition to the plan. All of these things are ok! Just make sure you know what you are getting for the price, because not all quotes will be apples to apples comparisons when you just look at the cost. Choose the best cost to value option that makes sense for your situation.
You’ll ask: anything, or nothing!
This, in my opinion, is the most important criterion for choosing your financial planner. Once you’ve selected who you are going to hire, this will ideally be a decades long professional relationship. Life is too short to work with people you don’t enjoy. I want my clients to see my name for a meeting on their schedule and smile! And I want the same for myself, when I see them pop up on my schedule.
It is important that whoever you hire speaks to you in a way that you are able to learn, grow, and understand. Your financial planner should be teaching you something new all the time. Maybe they’re teaching you something new about finance, introducing a new way for you to think about your goals, or maybe helping you and your partner have new conversations you’ve never had before. No matter what you are discussing, you will want to partner with a planer that teaches in a way you can relate to and comprehend. Make sure they are someone to which you feel you can ask questions. No question should make you feel stupid or embarrassed! It is their responsibility to meet you on your level and work with you until you understand your investments. If they are not willing to put in the work with you, move on to someone who will.
Sometimes it can also just be a matter of style. Just like every person you meet isn’t going to immediately be your best friend, every advisor you interview isn’t going to be an instant connection either. There is value to hiring someone you “click” with. You will be partnering with your financial planner in some of the absolute best and absolute worst times of your life. Money tends to be a significant factor in both of those areas. For a wedding or divorce, birth in the family or death, major promotions and career advances or layoffs, all of these things are emotionally charged and greatly impact your financial life as well. Make sure that the person you have selected as your financial planner will be able to help you navigate those major life situations in a way that helps you feel secure and confident in the steps you are taking.
So there you have it. Those are the 3 P’s of hiring a financial planner! If you cover just those three areas with any financial professional you interview, you will be able to make a confident hiring decision!