Do you have a financial planner? What do you know about them? What do they know about you? Finding the perfect financial planner can be a lot like dating online, you find a profile; you meet with them and then decide if the relationship should continue.
Here are 5 mistakes you don’t want to make when you are looking to hire a financial planner.
- Don’t use a financial planner just because someone recommends them! It goes back to the age old saying “If I told you to jump off a bridge would you?” I’m not saying that you shouldn’t take input from others but know that they may also have ulterior motives. Financial planners are often paid for each referral they give if they are a member of a business group or affiliation. So make sure the referral is from someone you trust and admire and is honest about the performance of that advisor.
Avoid the “SALESMAN” planner.
A good financial planner will help you assess what your goals are, your monthly budget, assess your risk comfort levels and guide your investment decisions on this. If you sit down with a planner and they are offering you various types of products right away be sure to question their motives. Is it really what is best for you or are they just looking to get paid and get you out of the office? I had a client who thought she was being really smart by seeing a planner. He had her set up with life insurance and a critical illness insurance policy but she was still overspending every month and didn’t actually have the money to pay both policies!
- ASK HOW THEY GET PAID! This is probably the most important and overlooked question. There are various ways a planner can be paid, from fee based, fee only or commission based. If a financial planner can’t give you a direct answer to that question I would be questioning their services.
Don’t just settle for the first planner you meet! Meet a few and take notes. What did you like about them, what don’t you like, do you know anyone that has used that person before? Just know that you are allowed to change your mind and you don’t have to commit only to one person. I have found planners that I would prefer one for mutual funds and one for insurance – it comes down to a personal preference.
- READ THE FINE PRINT AND ASK QUESTIONS. Did you know that some of the financial planners out there don’t actually even read their own fine print. I had a planner try to sell a critical life insurance policy to me right there in the office. I asked to have it emailed to me so I can review it…after reading all of the fine print it turns out it was a huge waste of money as there were “loopholes” for the company to get out of actually paying a claim. This planner wasn’t really looking out for me; if they were they would have recommend putting $100/month into something that would make me money, not an empty policy.
Now don’t get me wrong, after that last part you can tell I have had some bad financial planner experiences but I have also had some great ones. I talk to various financial planners at events to learn more about them and their business so that I can refer my clients to caring planners that are looking for their client’s best interests.
If you don’t have money to invest just yet, don’t worry you can get there. Message me for a free consultation so we can find out what is going on with your money, where it goes and how you can change your patterns to make it work for you.