How to Choose one of the Best Fee-Only Financial Planners

Over the course of your lifetime, you may manage $2 million or more dollars from your work income (assuming your average income is $75,000 over 30 years). That’s a lot of money if invested wisely could set one up nicely for a comfortable retirement.  Despite having access to these large sums of money in our lifetime, surprisingly according to a report from the Society of Actuaries (SOA), only 52% of pre-retirees and 44% of retirees actually consult a financial planner or advisor to receive guidance on the best way to manage their money.*

The SOA report also showed that roughly 96% of pre-retirees and 89% of retirees responded that they are concerned to some degree about their long-term financial future in retirement.  

Hiring a financial advisor can provide you with confidence and peace of mind knowing that you have a plan for your money that will benefit you and your family for years to come.  At any phase in life, but more importantly as you approach retirement age, a financial planner can be of benefit to you.  That’s because research shows that people who have financial planners tend to generate considerably better returns for retirement that people who don’t.**

So if you are ready to find one of the best financial advisors right for you, follow these 5 steps.

How to choose one of the best Financial Advisors:

          1. Experience Counts: Review the Advisor’s Work History

Financial Planning is complicated so it is critical that your advisor has a long track record managing their client’s money. The more experienced the advisor, the easier it will be for him or her to navigate up and down markets to ensure an optimal return.  

Here’s some questions you can ask to determine whether the Financial Advisor has demonstrated knowledge of, and experience with, the kind of financial planning you’re seeking:

  • What is your educational background, professional qualifications and work experience? Do you have experience from both up and down markets?
  • How many clients do you currently manage assets for?
  • How often do you meet to review your clients’ portfolios?
  • How do you add value and contribute to best possible outcome?
  • Who is your typical customer and what size of assets do you tend to manage on average?
  • Will you be the one who manages my portfolio and provide regular reviews or will I be served by another member of the team? Note: You don’t want to be passed onto a junior associate.
  • What are your credentials and professional affiliations?

         2. Chemistry and Integrity Matters When Choosing an Advisor

Talking about money and finances is a personal topic that you don’t do with just anyone.  You want a person that you feel comfortable with, enjoy talking to, and someone you trust to answer your most pertinent questions.
Before you choose your Durham, NC Financial Advisor, here are a few questions to ask yourself:

  • Are they a good listener?
  • Doe they seem interested in my goals and understand them?
  • Do they appear to be a person who takes his time to do a job well, or does they seem like someone who is focused on getting the work done as quickly as possible?
  • Do they take time to explain the steps in the process and manage my expectations?
  • Do they seem like he will take a personalized, hands-on approach to working with me?

    3. A Good Advisor Has a Well-Defined Process

Even though client goals vary drastically and markets change, there are consistent steps in the financial planning process which a reputable advisor should be able to share with you.  You want an advisor who has a consistent system for managing your finances so that it is simple and easy for you to understand.  

The following questions can be useful to evaluate the advisor’s process:

  • Do you have a methodology that you follow systematically?
  • What are the specific actions steps you take?
  • What type of investment philosophy do you have?
  • How do you plan to personally meet my personal life goals?
  • What obstacles might arise concerning my investment plan?
  • In what ways might we increase the value of my portfolio?

     4. Understand the Advisor’s Compensation Structure (Fees and/or Retainers)

In most cases, financial advisors are fee-only.   This means that they charge a percent based on the total assets managed.  You want to avoid any adviser whose compensation is strictly tied to the sale of products as they may be susceptible to bias. Product sellers, unlike most fee-paid advisers, may not be operating as fiduciaries who legally must put your interests first.

In some cases, sophisticated individuals with investment knowledge may only want a comprehensive plan created for them which they then choose to follow on their own.  The cost for a comprehensive financial plan may start at around $1,000.    

Here are some questions you can ask about the payment structure:

  • What fee percentage do you charge for assets under management?
  • What is the cost for a comprehensive financial plan that I follow on my own?  What is included in this plan?
  • How many times a year would we meet or talk by phone if I choose to have you manage my assets with the fee-only financial planning structure?

     5. Contact References  

Past clients can outline both the positive and negatives of working with a specific advisor.  Ask the following questions from references:

  • What does the advisor do well?
  • What do you wish that they did better?
  • Do you have any reservations about recommending the advisor or referring their services?
  • Did the advisor identify and prepare for obstacles up front? Or did they react to circumstances that could have been anticipated and/or avoided?

In summation, a good Durham, NC financial advisor will earn their compensation through value-added services that improve the long-term value of your portfolio. By going through the points above, you will be better equipped to find the right advisor to manage your portfolio. 

Located in Durham, NC, Integrated Life and Financial Planning is an independent financial services firm founded by Jerry Bergner, AAMS CMFC. As a Durham, NC, Financial Planner, Jerry’s mission is to help you work toward the life YOU envision for yourself and those you care about. If you need help in clarifying that vision, he can work with you on that as well! Book a consultation meeting today.