Fixing Your Finances 101: Step 5 – How to Get The Right Help

Here we are…the last step in Fixing Your Finances 101!

I sincerely hope that this series has helped you design a path to gain financial peace of mind and see that you can achieve what you want with the right planning.

At this point, we’ve set our goals, gotten organized, developed a spending plan and shored up the critical aspects of your financial foundation.

Some of you should be set at this point. Others may still be struggling with certain steps or understanding how to apply them to their specific situation.

If that sounds like you, this is your post.

Today, I want to talk about how to get the right type of help. The financial planning industry doesn’t have the best reputation right now, given its history of taking advantage of people and being self-serving. But that is changing.

It’s easier than ever to find good advisors that are required to work in your best interest and truly care about your complete financial situation. Below I explain whom these people are, how to find them and the questions to ask to make sure that they are a good fit.


Find a Fiduciary

Currently, anyone can hold him- or herself out as a financial advisor. But the tide is shifting towards more uniformity due to regulations like Department of Labor’s New Fiduciary Rule and more public awareness of the fiduciary standard (thanks John Oliver!).

In short, a fiduciary is the type of advisor that is required to advise in your best interest by avoiding conflicts and operating in full transparency. By contrast, many broker dealers, insurance sales people and other advisors that don’t fall under this standard only have a “suitability” requirement,  meaning they only need to offer investments are suitable for your situation. The best analogy I’ve heard on the difference is “Brokers have to sell you a suit that fits. Investment advisers have to sell you something that fits and looks good on you. “

All Registered Investment Adviser (RIA) firms fall under the fiduciary standard. So if you’re looking for help, begin your search by looking for RIAs.  You can find out if an advisor is an RIA on the Investment Adviser Public Disclosure site.  You can also find info from your state’s securities regulator or the SEC, depending on the size of the firm.


Look for the Right Designations

In addition to finding a fiduciary, you should look at your potential advisor’s designations to better your chances of finding someone truly qualified to help you manage your money. Keep in mind, these designations don’t automatically mean that person is a fiduciary.

The most widely regarded designation in the financial advising industry is the Certified Financial Planner (CFP®). Among other things, a CFP® has completed an education requirement, passed a rigorous comprehensive exam, had a minimum of two years of planning experience, and met ethics and fitness standards required by the Certified Financial Planner board. As a part of those standards, CFP® professionals are required to adhere to a fiduciary standard when they provide “financial planning.”

Other highly regarded designations include Chartered Financial Analyst (CFA), who focuses on investment and portfolio management, and Chartered Retirement Planning Counselor (CRCP), who focuses on retirement planning.

No matter how many initials an advisor has after his or her name, you will still find a varying degree of knowledge and experience. Research your advisor’s background and knowledge base to verify he or she can meet your needs.


Know the Payment Structure

You will run into a wide variety of pay structures when researching planners. Here are the most common types:

Commission Only – This type of advisor earns money by selling products like stocks, bonds, mutual funds, life insurance or other investments. An obvious potential conflict arises here when an advisor can make more money by steering you into certain investments.

Fee Based – This advisor will charge you a fee for his or her advice and may also earn a commission for selling you products in your plan.  Again, you have a potential conflict between the advice given and how much the advisor may make by putting you in one investment over another.

Fee Only – This advisor charges you solely based on fees.  This may be a flat fee for a service provided ($2,000 for a comprehensive financial plan), an hourly fee ($200 for an hour of his or her time), or as a percentage of your assets ($1% of your investment portfolio).  While these planners don’t have incentive to sell you products, they do have incentive to sell you their time.

The kind of structure you pick will depend in part on what you want out of the relationship. You may want someone you can call every now and then to ask a question. Or you may want a comprehensive financial plan.  Even still, you may want someone to handle all of your investment decisions and try to beat the market.

In my opinion, going with a fee-only planner provides you the most transparency in what you will pay for the advisor and reduces the chance of a conflict of interest. No matter which structure you choose, keep in mind the incentives and conflicts that may come into play in your relationship.


10 Questions to Figure Out if Your Advisor is a Good Fit

Many advisors have a specialty or strength like investing, tax or insurance. And while having a particular attribute isn’t a bad thing, you want an advisor that takes a holistic approach to bring together all of your personal-finance goals.

You also want to find someone who you can trust. So you should first seek references from family and friends. If you don’t have anyone who can provide a reference for you, ask anyone you interview for client and professional references. Lastly, make sure to interview three or more people. Giving yourself options and experiencing different approaches can help you find just the right fit.

Along same lines, these 10 questions can help in determining if your advisor is right for you. (The first three should sound familiar.)

  1. Are you a fiduciary?
  2. What licenses or credentials do you have?
  3. How do you get paid?
  4. Why did you choose this work?
  5. What is your ideal client? Do you specialize in specific situations? (Doctors, teachers, LGBT, etc.)
  6. What services do you offer?
  7. Can you explain your planning process?
  8. How frequently and by what means (in person, phone, Skype, etc.) will we communicate?
  9. Will I have access to all of my planning information?
  10. What happens to my account if something happens to you?

Choosing an advisor can be a daunting task. However, using these criteria will help you find someone that you can depend on.


And there you go. Step 5 and course complete.

I would love to hear any feedback that you have regarding the course – things you liked, things you needed help understanding…anything. You can contact me via Facebook or Twitter. Also feel free to email me at .

Again, I hope this was helpful.