Insights From Our Editors

How to Hire a Financial Advisor Who Meets Your Needs

By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD

May 15, 2019

A financial advisor can help you better plan your practice’s and personal financial savings–if you hire a good one, that is. Here’s how to ensure the advisor you choose will offer the help you had in mind.

One of the most significant activities you will do over your lifetime is to make sure your money is managed well so that your retirement is comfortable and as stress-free as possible. Are most people good at this? How does the general public do in handling this important area of life? To answer those questions, consider these retirement facts:

• One-in-four 65-year-olds today will live past age 90, while one in 10 will live past age 95. That’s important because what 60 percent of older Americans fear the most is outliving their savings. (Seniors are the fastest-growing group of bankruptcy filers in the country.)

• One out of three Americans has no retirement savings at all.

• Over 40 percent of single seniors 65 and over get at least 90 percent of their income from Social Security. Social Security is supposed to be a retirement supplement, not the main source of income.

• More than one-third of Americans expect to work in retirement.

• The average healthy couple will spend $377,000 on healthcare in retirement.

• Close to 50 percent of retired households spend more money, not less, in retirement.

What did we learn from those retirement facts? Well, if we were giving grades for retirement planning, a lot of people would fail, however, before we are too harsh in judging the general public’s lack of preparation for retirement, let’s take a short four-question quiz to see how savvy we are in this important area:

• Define the significant differences between brokers, wealth managers and financial planners.

• Explain the significant differences between fee-based and fee-only planners.

• Name three fiduciaries that you might work with who put your needs before their own versus other advisors/brokers/financial councilors who don’t adhere to this standard.

• Explain how the business cycle and the stock cycle impact your investments.

All right, maybe it’s not a good idea for me to take out my own appendix even though I’ve Googled how to do it. Maybe I do need professionals to help me through this process rather than trying to do it myself.

To help you choose the best financial advisor, follow these five suggestions:
1. Look for a Certified Financial Planner (CFP) designation. You also want experience – someone who has seen everything and understands the nuances of investment cycles.

2. Do a background check to see if there are any compliance infractions.

3. Be clear about how your advisor is paid. A fee-only financial planner is held to the highest fiduciary standard and will have the least amount of conflict of interest when providing advice and services.

4. Choose an advisor who is making over half their income from their own personal investments. You don’t want a rookie who is using your money to learn how to invest – and you don’t want someone who is making most of their income from selling you products (e.g.: insurance, stocks/bonds, real estate).

5. Make sure your financial planner is looking at your entire financial picture: insurance, estate planning, tax planning and investment management.

Choose your investment advisor carefully and meet with them at least yearly to update your plan.

 

References
i. https://www.forbes.com/sites/feeonlyplanner/2018/01/29/six-mistakes-people-make-when-hiring-a-financial-advisor/#6635bc933ec8
ii. https://www.fool.com/retirement/2017/04/16/10-retirement-stats-that-will-blow-you-away.aspx

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