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How to Choose a Financial Planner – 7 Tips by Wall Street Journal

Wall Street Journal Writer, Shelly Banjo offers, “Seven Questions to Ask When Picking a Financial Adviser.”  I am a huge fan of the article because Ms. Banjo is nonjudgmental of the financial advisor role but rather offers 7 sound questions to ask someone vetting for your trust.

Let me say this first, and I have mentioned this in the past, I think most people would benefit from a discussion or two with a financial advisor.  The financial advisor role is a hard one to nail down; not all financial planners are created equally, and that is not a bad thing

Could you do any of these things yourself? 100%.  Should you? That’s your personal decision.  But if you are going to go the route of a Financial Planner Ms. Banjo gives us 7 great questions

7 Questions to ask a Potential Financial Planner

1.  What’s the Advisor’s Background

Ms. Banjo is not really talking about the fancy letters after the advisor’s name, but rather checking on the advisor’s filings with FINRA, SEC, etc.  Some great resources are:

I checked out my profile on FINRA and found out I am all good (as suspected!):


One caveat that I don’t think Ms. Banjo highlights – don’t just depend on accreditations.  My Boss, who has zero accreditations employees multiple CPAs (as planners), multiple CFPs, and me, an attorney – is smarter and a better planner than all of us combined (in my defense he has 25+ years of experience on me).

2.  What do the adviser’s clients say?

I think what your friends or family have to say about a certain planner is very important.  That being said make sure the planner isn’t focused on one area of my list of advisor’s above.  For instance, we have 3 or 4 different planning groups that specialize in different areas – if you land in my estate planning group it is unlikely one of those planners are going to work with someone like me to save $30K of liquid dollars.  Alternatively, if you end up in the group that does cash flow management will that group be sophisticated enough to set up advanced estate planning tools like GRATs, CRATs and other fancy acronyms.

That being said, if the planner is reluctant to give out a client’s number so you can call and ask questions…do not get that suspicious.  If you were my client I wouldn’t give out your phone number.

3.  How does the adviser get paid?

That is a great question and Ms. Banjo handles it eloquently

Advisers use a bunch of compensation structures. They may get a commission on the securities they sell; charge fees, either flat or a percentage of the assets they manage for you; work at an hourly rate; or a combination of all of them. Ask advisers to detail exactly how they work and the total compensation picture from managing your portfolio. Be wary of anyone who shies away from answering these questions in a transparent way…

Transparency is the key.  In my firm we have clients that we charge a fee, and sell no product (investment or insurance), we have clients that we charge a fee and sell products, and then we have clients that we take no fee from but sell investments and products.

Just understand the type of relationship you are getting into.

4.  Where are the Advisor’s Checks and Balances?

Most reps will have some sort of auditor where trades go through, understand the system.

5.  What’s the adviser’s track record?

I think it is more important to determine your relationship with the advisor prior to asking his or her “track record.”

  • Are you looking for a transactional relationship to grab just one or two investments?
  • Are you looking for a confidant that is going to handle cash flow? What is the barometer then?

Prior to asking a track record – figure out what your goal is, then ask, how the advisor has helped people in the past get there.

6.  Can the adviser put it in writing?

Any advisor should not have a problem putting something in writing.  However, that being said don’t freak out if they can’t promise you everything.  This is because that particular planner may be associated with a broker-dealer that does not allow them to promise certain things.

Additionally, no planner should ever guarantee investment results (other than certain guaranteed annuities) – if they can promise you 15% year in year out…don’t walk RUN out of that office.

7.  What do other Pros Think?

My thoughts:  Absolutely! Run my ideas past your CPA and Attorney, I am always willing to defend my plans.  That being said, don’t discount my ideas just because they said “no.”  There have been CPAs and Attorneys that have been wrong in the past, maybe they don’t live in this “world”, or maybe they are just stupid!

What questions are Ms. Banjo missing?



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