Alphabet Soup of Advisors
My favorite time of year is definitely fall, enjoying the cooler weather and fall activities. Fall makes me think of hearty bowls of chili and soup. Do you remember using alphabet soup to spell your name or possibly specific words for your siblings to read...? Hey, I only spelled them, I didn't actually say them.
What Does THAT Spell?
In my profession as a Financial Planner, many questions come my way to clarify what I do and how I serve my clients. Mix those questions with the numerous designations available in the related industries to financial planning (investments, insurance, banking, etc) and you get well... alphabet soup. Basically, a lot of letters after people's names with not much explanation.
There is estimated to be over 100 financial designations (Investopedia, 2014). The range of experience, education and rigor needed to attain a particular designation greatly varies. Obtaining credentials sometimes requires a simple weekend read and a few vetted designations involve a year or more of intense study and exams. My designation, the CERTIFIED FINANCIAL PLANNER™ requires a minimum of three years full time experience, passing 6 exams including a comprehensive 10 hour, 2 day final. Then to maintain my mark, I must complete 30 hours of continuing education every two years. For a list explaining the numerous credentials out there, read more here.
"If you can't convince them, confuse them."
- President Harry S. Truman
It is Scary, it Really is.
Halloween often brings some tricks and scares that are harmless fun. However, the lack of designation explanation and the "tricks" (we will call them) that many "advisors" employ are scary. We are talking about your financial plan, reaching your goals and growing your investments- your life savings! You need to clarify who you are working with and what they will do for your family.
Here is what you should know and ask of your current advisor or if you are in the process of interviewing for one:
How do you charge for your services?
It's called Full Disclosure. You need to ask, "how do you get paid?" Typically, you are better served as a client being billed by management fees versus commissions. This helps remove the conflict of interest involved with selling ("cha-ching" $...commission) and buying (again $... commission).
Who is your boss?
You want an independent advisor; one who is not employed by the big investment bank or insurance company in the name. The reason is simple- you want unbiased advice from an advisor, who can choose what is best for their clients, not be told to do what is best for the employer. The last thing you want is an employer telling your advisor to "sell or buy" such and such for you, their client.
Who will be the custodian of my assets?
Heard of Bernie Madoff? You want a safe third party holding your IRA, Roth IRA and/or investment accounts. It usually is not wise to allow an advisor to take direct reporting and handling control of your assets.
What licenses and credentials do you have and what did it require to obtain them?
"Clients' interests always come first." This is the motto I live by and am required to uphold as a CERTIFIED FINANCIAL PLANNER™. As well, you want to make sure your advisor is appropriately licensed and professionally educated, not just self-taught.
What services does your firm provide?
Have you ever heard, "Sure, I'm a Financial Planner." Financial Planning means making a plan and guiding you along it. Many "advisors" say they are a financial planner but this unfortunately doesn't hold water with most of them. They simply want to just hold your investments. Yes, investment management is critically important, but it is only as good as your financial plan and utilizing the best options available to then reach your specific goals.
Another example, do you want your CPA diving into the world of investments and financial planning? Unless they have specific education, the time and most importantly the trained staff, the areas of tax accounting and financial planning are usually best left separate.
Now a question for you... Ask yourself, "Do I really like this person?"
The advisor you hire must be someone you like (along with respect and trust). You will spend a good deal of time with them over the years and they will be instrumental in your success. They likely could become one of the most important people in your life and family's legacy- helping you dream, set goals and make plans to reach those goals.
For more on what questions to ask, follow this link.
Please reach out to me if you have questions about your current "advisor" or are seeking to hire a professional to assist your family.
To your financial success,
Luke Fields, CFP®
About Stewardship Cents
Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it. Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have. Stewardship is a belief of responsible overseeing and protecting of important resources.Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a
CERTIFIED FINANCIAL PLANNER
™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
