Nick Stern, The Daily Record Newswire
One of the first things to notice these days about choosing a financial planner is how many more options there are; it can be daunting. Decades ago, someone with significant assets seeking a financial planner had to go through a bank, insurance agent or stock broker, says Bradley Troy, vice president of wealth management at PSA Insurance and Financial Services.
Now, investors can choose among a broad array of qualified candidates.
And that abundance of choice leads, Troy advises, to the first step any investor should take when deciding on a financial planner: Visit the Financial Industry Regulatory Authority (FINRA) website, finra.org and look for disclosures. Among other details, you'll be able to quickly view whether the planner is a registered investment adviser. You can see if they've been sanctioned by a broker dealer or terminated for cause - an instant warning sign you may want to carry on with your search, Troy says.
You might also find that a financial planner has moved around a lot and worked at multiple broker dealers; another sign you might want to continue looking.
A Google search of the party's name is another good idea to begin your search as it can quickly turn up any negative mentions in the press, said Tracy Sorzano, director and senior vice president of PNC Wealth Management.
On the other hand, receiving a recommendation from a friend or acquaintance you trust is a good option, particularly if it's someone with a proven track record of managing individual portfolios at larger institutions, Sorzano said.
But within the affluent marketplace, many of the financial planners you'll find usually have been vetted, Troy says, so that brings us to the next step: deciding what, exactly, you want a financial planner to do for you. Do they have a process and a clarified contract for the services you are seeking?
To begin, it might not be enough to focus your decision on returns alone, say Sorzano and Troy. That's partly because every individual's circumstances are unique; various factors such as real estate holdings, taxes, estate planning, liquidity and charitable giving may all play a part in a person's investment strategy as well, they advised.
The financial planner you're looking for can be seen like an architect bringing together a complex product, looking everywhere for efficiencies to leverage, like charitable giving and estate planning, Troy said. It's someone who has either assembled a team to fill out the varied skill set required - independent attorneys, accountants and investment specialists are important - or it's someone with broad knowledge of those topics.
Trust, transparency and openness
Independence and fiduciary duty to the client is another important characteristic of a good financial planner, Sorzano said. When you first meet with a planner, they shouldn't try immediately to sell you a product, but should listen carefully to your short-and long-term goals.
Ask the planner if he has proprietary products and services manufactured at the firm, or visit the company website to see if any institutional affiliations are published, because they may ultimately create a conflict, Troy said.
For those solutions the planner does have in mind, she should have the ability to explain why they are correct and work for you, Sorzano said.
You should also, after going through the process of gathering documents and reviewing them together, have the ability to see a little work product before you hire someone, Troy said.
And remember, don't fall into the trap of making quick decisions, he said. Particularly for the investor entering or about to enter retirement who is trying to rush into to important decisions about allocating their savings, those decisions can be irrevocable or at least very difficult to undo.
Transparency in terms of fees is also important to obtain upfront so you can price shop financial planners, Sorzano said.
For example, it may not always be easy to determine what sorts of fees - administrative or advisory fees, say - are included in a particular mutual fund. Your adviser should be comfortable explaining those fees to you clearly and without delay.
Open access to the organization is another factor you should consider. People today are savvy and expect access to their accounts at any time of day from any location, Sorzano said. If you want to log into your account and make changes at midnight on a weekday, you should be able to do so.
Meeting and making corrections
While different types of investors vary in their desire for the frequency with which they desire to meet with their financial planner, you'll want to establish a process upfront for meeting on a regular basis to discuss and review whether the plan is meeting your goals and expectations, Sorzano said.
This could mean you'll meet more frequently at first as you're deciding on various aspects of your strategy, and then less so, maybe once a quarter, for example. But the idea is that the process of planning your financial future is likely never finished; changes can and should be made according to shifting market conditions and your own goals, she said.
For example, let's says you'd like to keep about 50 percent of your resources in stocks, Sorzano said. Then, after a few months or longer, the value of those stocks has risen to comprise 65 percent of your holdings. At that point, you may want to meet and re-distribute funds into other areas and thus rebalance to your original formulation.
At the very least, you should meet with your financial planner once a year, preferably face-to-face, said Troy.
And don't forget, make sure you work with someone you like, he advised.
Published: Mon, Apr 27, 2015
