OMG seriously, you *have to* watch that video up there! For anyone who follows me on Twitter, you’ll know how obsessed I am with it, haha… (and if you’re reading this via RSS, click here to see what I’m in love with). It’s a pair of cartoons playing out a “day in the life of a financial planner” and it cracks me up to no end ;) And I’m not even a financial planner! I can just imagine what their clients put them through sometimes, haha… oh man. Good stuff. “Harry Potter and Warren Buffett together could not help you!”
I think this video will single-handedly get me to finally sit down with one though, and learn the ins and outs on what they do once and for all. And even more importantly, how they can help US! One of my boys opened up his own practice a few years back, so the wifey & and I plan on scheduling in a time to come in – just like regular customers – and go through the entire process ourselves :) Should be fun! And, of course, I’ll be blogging about the whole experience once we get started.
I thought it would be good first, though, to get YOUR impressions of CFPs (Certified Financial Planners), so I can stroll in with a boat load of ammunition ;) I know I’ve already got a dozen or so questions for ’em right off the bat, but maybe you have some better ones? Also curious to see if you’ve ever used one before or not.
So here we go – this week’s 5 For Friday on Financial Planners starts NOW:
- Have you ever used a financial planner before?
- If so, what did you think of it all? (If not, why not?)
- How much did it cost you? Was it worth it?
- Do you TRUST financial advisors?
- Do you think YOU could do a better job than them?
- **BONUS** What’s a question you’d like me to ask them for you? (I’ll make a list and bring it!)
Here are my answers to these – then it’s your turn!
- Used before? I have not. But I’ll be starting soon!
- Why? Honestly? I’ve just never made it a priority. I’ve never been against them, I’ve just never taken the time to find one I liked and then schedule an appointment (my parents have been trying to get me to go to one for YEARRRRS, they swear by theirs! And unfort. theirs is too far away for me to come visit, or I woulda started 4 years ago!). And now that I have my own CFP friend, I feel like it’s a good time to finally suck it up and go in… it’s like a new mission for me! (And you know how I like me some missions)
- How much did it cost? N/A – Though I can tell you that my friend charges a flat rate per year no matter how little or how much you use him. Which I love! No worrying about reaching out w/ questions cuz you might get dinged .25 hourly rates, etc, and you know the advice will be solid because there’s no commissions involved! They get paid the same no matter what you invest (or don’t invest) in. It’s like having your own financial guy on standby all year long ;)
- Trust financial advisors? Yeah, I believe there are a lot of good outs out there, just as much as there are a lot of shady financial advisors in the mix (like with everything in life, no?). The trick is finding one who you believe is in it for YOU and sticking with him/her for however long it makes sense. It’ll be interesting to see how my mission will go, and if I end up keeping him around for years and years to come… if I’m happy with everything though, why not?
- Can I do a better job? Hmm…. that’s tricky. Mainly because I don’t *know* exactly what they actually do yet at this point. I will say that I think I’m doing a damn good job so far though! For sticking to the basics and not jumping into anything crazy that I don’t understand (a key principle of success, I find). But on the other hand, I also feel like all my accounts and investments are in big chunks all over the place and I don’t have a solid unified “game plan.” I just keep saving and growing my money with no real direction other than to just keep doing THAT, haha… so we’ll see!
- **BONUS** I’ve actually already asked my two main questions (“Can I call you anytime whenever I have a question and *not* get charged for it?” (Yes) and “Do you work on commissions or flat-fee?” (flat fee)) but I still have some other smaller ones like wondering how much *time* they may be able to save me, as well as how the whole process works in general (Do we meet every so often? Will you call me when big changes happen? Etc.). I now the second we start talking though, my mind will be inundated w/ newer and crazier scenarios to be answered ;) So I hope he’s prepared!
Alright, that’s enough brain work for a Friday… your turn to stretch it out! What are YOUR thoughts on financial advisors? Shoot back your 5 answers below :) I’ll let you know once we go in and get started! And if you haven’t already, don’t forget to WATCH THAT VIDEO! Haha…. I’m going for view #9 right now, it never gets old.
PS: I keep interchanging the terms “financial planner” with “financial advisor” — I think they’re the same thing, but maybe I’m wrong? Feel free to slap my hands if I am ;)
Get blog posts automatically emailed to you!
J….I think that a CFP has a little more experience, passed another round of tests. Maybe like the difference between a CPA and a regular accountant. I could be wrong but I did Iook into that question a while back.
I would wonder about the funds that he would want to sell me. Can I see how it stacks up against others? Why would I want to go with yours that was ranked 15th last year when I could go with T. Rowe Price who was ranked 1st (not actual ratings..just example)?
Have you ever used a financial planner before? Yes, I use one currently and they are one of my good friends
If so, what did you think of it all? (If not, why not?) I think it is great if you can trust their guidance and find that they are straight forward with you and give you options.
How much did it cost you? Was it worth it? It isnt very much to use, I dont even realize the fee once its gone.
Do you TRUST financial advisers? I think its good to use a friend or someone that your comfortable. They will be more honest with you and its comforting once you both agree on where to put your money.
Do you think YOU could do a better job than them? They have access you a lot of information that you cannot get a hold of. So, they are more knowledgeable and certified that us regular folk. I think they do the best they can.
That video cracked me up! It’s funny because it’s true!
I’m in real estate and we get people like that all of the time.
LMAO on that video, it was fantastic. Have not laughed that hard in a long time!
1 – Yes, we use a planner now for a small portion of our assets. (about 10% of our funds)
2 – I like having a planner do some of our stuff as it helps diversify away from what I like to invest in. This way there is a bit of variety in our styles.
3 – 1% of assets under management, yes worth it for the reason above.
4 – I trust mine! I was very diligent in interviewing planners. We talked to a minimum of three with lots and lots of questions asked. I do not trust all of them, because I have talked to many that made my jaw drop at disbelief in what they were saying!
5 – I think I can do an equal job as them, then when you take into account fees that means I can do better! I do spend a good amount of time managing our investments, so I am not just choosing something on a whim.
Good luck at your appointment!
I’m pretty sure my favorite part of the video is when he offers her a lollipop- there are no fees to it. LOL… and the Harry Potter reference. But that’s because I’m a huge Harry Potter geek.
And I would answer the 5 questions – but I actually have never been to a financial adviser. I probably need to though. ;) Heck, I don’t even know what I would ask them! I tend to be a trusting person – so I probably would trust one. I would just need someone who knows more about this than I do to point me to the RIGHT financial adviser. So… guess that answers your 5 questions???? I need more coffee. Maybe that’s my problem. I buy too much Starbucks.
Have you ever used a financial planner before? Yes! My dad took me to his every year to better understand my college fund and to be part of the planning.
If so, what did you think of it all? I really liked my guy. He got along with my family really well, and always seemed like he was working in our best interest. He explained things clearly enough for my 16 year old self to understand and made me feel both good about taking his advice AS WELL AS making me feel empowered enough to do it myself someday. He also taught me a ton of useful work/life/money lessons too!
Do you TRUST financial advisors? I trusted MINE. After my guy left, I didn’t go see his replacement more than once because I got an icky feeling from him.
Do you think YOU could do a better job than them? Now I think I can. I use Schwab, and all of the things my Schwab guy recommended were things on their “Select List,” which is accessible online for clients. Not that I pick ONLY from those, but they guide my selection process!
@Brad Moore – Your questions are duly noted! I’ll have to check out the difference in titles too. That could certainly be the case.
@Tim – Oh cool! I’m glad you found someone you can trust like that :) I agree too — they have much more knowledge and materials than we have, and they immerse themselves 40-60 hours a week in this stuff. I’m sure you and I could research and come up with a lot of good stuff too, but would we want to invest that much time? Not me! It’s so boring to me, haha… but not the planning portion of it – that I think I’m gonna be super interested in.
@David Hunter – Haha, right? I bet you get a lot of these too: “Why do we have to pay you a commission? All you do is drive us around and open up doors, right? We can do that ourselves!” ;) I was a realtor for 3 months and almost wanted to gag myself. I closed like 3 deals super fast, and it was awesome, but I couldn’t take how slow the whole process went — you def. need patience!
@Andrea Travillian – You should watch it like 3 times today — it gets better every time! :) I’ll let you know how it goes, I’m pretty excited!
@Emmy – Also, “I’m surprised your pants are on correctly!” Haha…. omg that cracked me up. That lollipop line too for sure ;) Go get more coffee!! I loooove me some Starbucks – always worth it ;) I don’t care how much we “waste” over a course of a year.
@Leah – Oh man that sucks – I wish he was still around hooking y’all up! That’s the best — having a good family friend over all the years helping you out (and helping them too! it’s totally win-win when done right). Glad you learned a lot! :)
Hey .. I use to work for a successful financial advisor who has been doing it for 25+ years. I have studying finance, marketing and financial planning in school and have been working in the financial advising industry for the past 6+ years (since graduating). I believe that experience is important. You don’t want a career changer immediately because he may not make it and you’re stuck starting from stratch again.
My initial thoughts .. financial advisors don’t have a niche. Financial planners typically do financial planning (and sell insurance and manage investments). Most advisors who market as financial advisors are a general term. It’s like saying you’re going to see a doctor. But, what kind? An orthopedic, heart surgetnt, general physician, clinic? They can often provide the same services but target different populations. Some say advisors say that certain guys only “market” themselves as an investment mgr, financial advisor, financial planner, etc for marketing .. but think about the name what you’re really getting out of. To answer your questions .. I’m going to focus on the financial planning aspect of it.
(1) Have you ever used a financial planner before?
… Yes/No. Since I worked for one and created all of the financial plans, I would create a plan for myself and work with the VP of Plan Design on talking about.
(2) If so, what did you think of it all? (If not, why not?)
… I like it because it keeps me accountable. It’s like working with a personal trainer. You’re more likely to go to the gym if you have someone following up with you. Also, a few of my 20-30’something friends have asked to create a plan for them too, but honestly — when you’re younger, there are SO many variable to impact your plan. It’s not as valuable and could taint your future experience. If you don’t fall into the niche, then it’s not worth it. If you’re a 20-30 something you should focus on debt paydown, building equity, saving and investing. It’s plain vanilla finance 101 stuff. I believe the financial planner are best for suited for
(*) families with children (to evaluate insurance)
(*) if you inherited a large amount of money (for tax planning purposes)
(*) if you have large amount of assets. By large, I mean, more than $500k. You typically can’t talk to a financial advisor and have it be beneficial if you have less than $250k. It’s beneficial to talk about investment planning because it keeps you on top of your diversified investment strategies
(*) If you have more than $2m in investable assets, then, it gets into estate tax planning, which is crazy important. This strategy is the most sophisticated involving GRAT, SLAT, trust, family partnerships, etc
(*) If you’re a successful business owner. A financial planner can help you with solo 401k, sep ira, getting you connected with other benefits and get your connected to successful accountants and attorney. It’s also a niche because successful business owners will need to think about continuity plans (financial analysis & the impact of sale and buy-out scenerios)
(3) How much did it cost you? Was it worth it?
The planner I work for did comprehensive financial planning through the largest financial planning firm in the country. The company mandated a $2,500 charge if the planning department create it; however, Mike’s plans were in the range of $5,000 – $20,000 depending on the complexity. By having a planning department create financial plans, you’re “team” of financial planners is more than 1 person and involves diverse and the latest stragies. I can talk more about this at another time. Anyway – $20k sounds like a lot but it was for a multi-family business and included continuity planning. The final financial plan ended up saving the client $50k ANNUALLY. $50k sounds like a monumental sum of money, but it’s part business expense and was spread over multiple families. He also made money by selling insurance policies and managing assets. But, if you bought a plan – those recommendations are yours and could shop around to see if other advisors could beat the price/offering. Most wealthy families who do financial planning stick with the relationship.
(4) Do you TRUST financial advisors?
Some. There are some advisors who worked in my office that I won’t trust for the world and others who I would trust with my life savings. So. Interview them!
(5) Do you think YOU could do a better job than them?
I think I could do a better job than 50% of them. I hope to have more confidence and skills than 80% of them when I’m ready to do it. I’m studying for my CFP now and am fully-licensed. Although I’m not a financial advisor at the moment, I have the tools, experence and I’m learning different ways to approaching financial planning by working in other financial service roles. I want to make sure that I’m financially comfortable and stable to work on commission alone because I don’t want the pressure to sell something in order to feed myself and keep a roof over my head. So … make sure your financial planner/advisor is stable.
**BONUS** What’s a question you’d like me to ask them for you? (I’ll make a list and bring it!)
How long have you been working as a financial advisor? How many years prior to financial advising have you been in the industry? What are your guiding lights when providing financial advice? What made you want to become a financial advisor? Tell me about your most difficult client. Tell me about your ideal client. Tell me about your family, where you live and your hobbies. What is your time line for delivering proposals? What can I expect to happen in our meetings and future meetings? What type of value-ads does your firm provide? Are you an independent, wire house, or captive agent? How many financial plans do you produce a year? Do you make the financial plans? Or, does your company have a Department of Planning who specializes and generates them? Is there someone to QC the financial plan? What does the renewal and future years of financial planning with you look like? What is your financial plan? What is your continuity plan? What if you die tomorrow, who will have my accounts? Will I get to meet your support staff? What are their certifications, qualifications and experience? Do they enjoy their job? Do they enjoy working for you? What is the most difficult thing about working with you?
I can go on, J Money. Feel free to message me. I hope your first experience is a good one.
1. Yes. Just recently. I get to to harass the financial advisors at my credit union for free, so when I lost my job, I went to them to deal with rolling over my 401k.
2. It was great. I have a deadline for rolling over my 401k, so they were able to do the research to put together a great portfolio based on my risk tolerance, which was similar to what I had in my 401k. I can still do my own research later and move things around free of charge if what he put together doesn’t work for me.
3. Nothing. 100% free.
4. The market’s been crap anyone. For a price of free, I don’t really have much to lose.
5. Paperwork-wise, it’s been a breeze. He knows exactly where and what to fill out, and it gets things done fast. In that sense, no, I couldn’t do better. When it comes to designing a portfolio, etc… well, that’s a large amount of luck. The portfolio he put together is about like the one I had in my 401k, the advantage being that he can do it faster, because he already researched all of the funds.
6. DO YOU FEEL POWERFUUUUUL!?
Have you ever used a financial planner before? I have talked to a couple (one was a friend and one was a person my dad uses). Personally I would not use someone who was my friend; I’m not sure I could take their advice and be objective about it. It might be hard to separate friend from business associate if things went to hell.
If so, what did you think of it all? (If not, why not?) I was more impressed with the guy my dad uses, but then again he has been doing it for much longer, had a finance degree and an MBA so his knowledge of business was a little better than my friend who was just starting out.
How much did it cost you? Was it worth it? Both were initial consultations of sort so they were free. When I met with the guy my dad uses it was because my dad also was setting getting me informed on his finances for when he starts working on his estate plan so I wouldn’t be too in the dark.
Do you TRUST financial advisors? I feel like I would be more likely to trust a fee-only advisor, since the commission guys are paid to sell you something. A lot of times you can implement the commission guy’s strategy for a lot less than he is selling it for.
Do you think YOU could do a better job than them? I think I can do a better job than most of them, but having someone to bounce ideas off of (for a fee) could be helpful. Thankfully for me I have some other friends who are just as big of financial geeks as I am, so we already exchange and critique each other’s ideas.
**BONUS** What’s a question you’d like me to ask them for you? (I’ll make a list and bring it!) It’s a silly questions but it lets you know how they think logically (also I was asked this is a job interview once). How many piano tuners are there in Chicago? Then have them explain how they got to their answer. There is technically a correct answer, but its more about the thought process. Plus I have always wanted to hear someone actually answer this questions besides me.
Have you ever used a financial planner before? um, yes, all the time! they work just down the hall from me! ;)
If so, what did you think of it all? (If not, why not?) I like it. I’m an insurance professional. I can tell you how to properly insure your vehicle and home all day long, yet I do need financial advice and due to lack of knowledge, may not undersand exactly what I need. The advisors/planners that I’ve worked with take the time to understand what I need…
How much did it cost you? Was it worth it? Free, baby! Heck yes it was worth it!
Do you TRUST financial advisors? YES!
Do you think YOU could do a better job than them? Better? not necessarily…maybe more thorough, since I do understand a different line of financial needs w/insurance.
I can’t get past that video, and I know very little about financial advisors. I am really looking forward to your blogs though, I know I have a lot to learn in that regard. I can’t imagine how frustrating it must be for financial advisors to work with some clients. That video was sadly hilarious. I wish I could live an extra third of my life and learn everything that has to do with personal finance and do everything myself, it is hard to trust someone else, but we have no choice, unless we are Hermione and we have that little time turning device she uses from The Prisoner of Azcaban, haha!
I’m a CPA working on my CFP certification. I currently work in a small firm handling about 100 clients total — some just tax clients, some just financial planning clients, some both. The biggest different with financial planners vs. financial advisors are that FAs tend to handle the managing of your investments. Planners look at your overall picture — estate, retirement, college cost, insurance, tax, and financial planning to guide you towards your goals.
That’s a funny video! Personally, we haven’t used a financial planner yet, but I think one will definitely be a part of our future. The process of working through these issues with someone totally devoted to tackling financial questions seems very healthy :)
Your in for a treat b/c I used to WORK for a financial planner. (I don’t have any money so I don’t have the need for one)
For the most part she knew her stuff and if she didn’t she knew who to ask to find that information out. She didn’t charge people any kind of fees to come in. Once we were managing your money she charged soo much per account between 5 and 10 percent usually. We did have flat fees on certain kinds of accounts.
My father passed away when I was 8 years old and my mom received life insurance and such. They never had a lot of money so they didn’t have a “financial planner” and I’m not sure how popular they were in the 80s and 90s. But my mom says she wished she had one help her manage the money better. She thinks if she had had a financial planner she may not have made that many stupid mistakes and maybe would be in a better place financially today.
1) My wife and I have used a Financial Planner (FP) for years that we found through Dave Ramsey’s ELP program.
2) He’s been incredible. Great heart, goofy guy, but most importantly he was able to teach my wife about mutual funds and convince her about the same things I had been trying to teach her for years.
3) He has the same 5% fees as many other FP, although I would prefer a fee-only advisor. But our guy is worth it.
4) Even I am weary of FPs and FAs. The good news is I know enough to tell if they are good or just trying to sell me something.
5) Our returns have been good. I’m sure we could do fine without our FP by investing in index funds but there is one added bonus or working with a FP that nobody thinks about: If I were to die today then my wife has someone we already trust who can help her with the money in a time she would be grieving. She wouldn’t have to dig up the backyard looking for coffee cans with stashes of money in them, she won’t have to filter through tons of paperwork to find our investments, she will have someone who can hold her hand after I am gone. THAT’S WORTH A BIT OF SCRATCH.
To give you a sense of who my FP is, I posted a letter he sent a few months ago (http://www.moneyplansos.com/a-message-from-my-financial-advisor). Pay close attention to the last sentence. I laughed out loud after I read it.
Steve brought up another GREAT point about having a Planner or Advisor help you with your money — If something should happen to you, your significant now has someone to go to who will know the ins and outs of your accounts! Rather than have to figure it all out on her/his own. The wife and I do our best to talk about everything, and keep each other in the loop, but sometimes I still worry that it’s not enough if anything crazy happens ;) So def. something to keep in mind!
Now for some responses:
@NancyO – Wowwwwwww that is a lot of GREAT information! Thank you so much Nancy! :) I should totally type up up every single one of those questions and then do a blog post on them, haha… that would be awesome (well, for us, maybe not so much for him ;)). I’m def. gonna keep all of this in mind, I really really appreciate it. Especially your advice for the younger generations – I agree. Most people in their 20s/early 30s should really be concentrating on the simple major stuff: knocking away debt, saving up money, and getting their main foundation down. Once you start killing that and coming into bigger life changes, it’s prob. best to consult with an advisor. You’re awesome for spending so much time sharing all that with us, thank you :)
@Matt, Tao of Unfear – Oh nice! Yet another reason to love credit unions :) Always been a fan of them over the “big banks” out there, nice find my man. (And I hope you find a more intersting job/project to work on next too!)
@Brian – HAH! Really?? Omg that’s funny… how the heck do you even answer that? (I’m literally thinking about how to do so right now as I type this :)). I could probably come up with something good if given 5-10 mins to think about, but man – right on the spot? I suck at that stuff. My brain is too slow to process anything clever. I’ll see if I can throw it in there though – unless he’s reading this right now, Haha… thanks for sharing all your experiences too so far, I really enjoy hearing everyone’s thoughts :)
@Trinnie – You’re in the PERFECT POSITION! Haha… I’m totally jealous. I wonder if USAA would give me a stall to blog out of there? So then I can just walk over and pick everyone’s brains ;)
@SmartAssetTeam – Haha, you got that right. I’d LOVE to spend 1/3 of my time soaking in new stuff too – how awesome would that be!
@Travis – Ahhhhh, okay yeah that would make sense. In my case then, I want to talk w/ a PLANNER moreso than an advisor. I need a larger overall picture planner than I do someone to invest my money/assets. Thanks for the info! And I hope you get your CFP smoothly!
@Roshawn @ Watson Inc – I know, right? It would be awesome to have someone you trust on your side whenever you need to work it all out :)
@Beth Anne @ The Catholic Couponer Blog – Awww, I’m sorry to hear about all that. I hope things get better for your family! And it looks like you’re doing pretty well so far :) Thanks so much for sharing!
@Steve MoneyPlanSOS Stewart – YES!! That is an EXCELLENT point I totally didn’t think of! Wow. That is most DEF worth having someone else “in the know!” I’m always worried my wife won’t know what to do if something should happen to me (even though we talk about stuff periodically) so that’s a very very good tip my man, THANK YOU! Going over now to check out that post :)
Thanks for the well-wishes. Focusing on my writing for now. Crossing my fingers.
There’s always starvation if that doesn’t work out. :)
Hah! I doubt you’d ever get there :) btw, saw your emails come in – not ignoring you, just playing catch up. Will hit ya back as soon as I can my man. Have a great holiday weekend!
I would be curious what firms he’s worked for in the past. Is that something you know?
What firm does he work for now and what funds/etf’s does he recommend? Is he/she of an active of passive approach to investing?
If a guy has worked at Edward Jones, Ameriprise, Axa Equitable or a slew of other shady places (the devil’s dens) for longer than a year or two, I would be hesitant. If he or she sold whole life products at Met Life for 5-years, I would be hesitant. I would not give a financial planner who has worked at Ameriprise for a stretch of more than 2-years before he bailed, the time of day. IF the planner got his feet wet, got his CFP and then bailed, I think that is the reasonable progression. If you stay longer at a place like Ameriprise than two years selling people junk funds, don’t get your CFP and still only have a Series 7, you are someone to avoid!
I wouldn’t trust anyone until I have multiple dealings with that person and trust is built. I wouldn’t give blind trust.
No worries. I know how high-maintenance inboxes can be. ;) And you have a good holiday too. :D
@ArmChair – Haha, all good things to consider! “Devil’s Dens” – I like that ;) I’ll find out too, though I can’t say I’m too familiar w/ any of those firms really. Appreciate the tips.
@Matt, Tao of Unfear – Emailed you back! In love w/ your article ;)
LOVE, LOVE, LOVE this video! As a financial planner, I SWEAR to you that I’ve had conversations very similar to this. In fact, check out this rant video that I did: http://www.goodfinancialcents.com/a-gift-black-jack-and-a-brand-new-truck/
As far as who to hire, definitely have to lean towards an advisor that has the CFP designation or is at least working towards it. I think it shows a commitments to the profession and the financial planning process.
As a fee-based advisor, I’m partial to that model, but there are good commissioned based advisors out there. They are not all evil :)
My big thing is to straight up ask them how they get paid and how much they will get paid for working with you. There’s no other professional: attorney, accountant, architect, realtor, doctor; that you aren’t 100% sure what the bill is going to be to utilize their services. They should be open to answering it. If not or they dodge question with “Well…ummm….that’s a hard question to answer….” B.S.! I’ve been on both sides and once you know what investments you’re working with (dollar amount), you know EXACTLY how much you are going to get paid.
Can’t wait to keep up with the journey with your financial planner.
P.S. If you want a second opinion, I might know of an awesome CFP that lives in Illinois…..Just sayin’ ;-)
Ooooooh I like where you’re going with this sir! I just might have to give you the ol’ ring a ling ling one of these days ;) Skyping for our financial future? I kinda like that. I’m putting this on the books to consider, good sir.
In the meantime, see if you can beat my high score of 9 rotations on that video now (I watched it one more time since my last email to you, haha…). It make the perfect background noise ;)
To financial success!
I think I would enjoy my job more if I could tell people to get the #$% out of my office.
haha, I bet ;)