I thought I hired a “Financial Planner”

As I’ve indicated in the past the financial service industry is full of smoke and mirrors. There are all kinds of misinformation being exchanged as discovered by a recent Cerulli Associates study. They asked financial service providers to report what their practice type was and what their deliverables were with regard to that practice type with very interesting results. While over 60% of advisors claimed to be financial planners it turn out that only 30% were actually completing the work of a financial planner for their clients. The study also looked at both the education and experience of the person claiming this profession.

On the other end of the spectrum only 22% of advisors claimed to be an investment planner while they determined 56% were actually using this business model for their practice. The new hot term is wealth management and the trend continued under this heading with 11% claiming to be wealth managers while only 6% were meeting the criteria. Their definition of wealth managers revolved around both the deliverable to clients and the fact that over 50% of their clients had a net worth of over five million. It appears the only group of advisors that were honest was pure money managers coming in at 9% and the report confirmed all 9% were exactly what they claimed.

This becomes a problem when the general public thinks they are getting one thing and they end up getting something else. I hear about this all the time when clients tell me stories about other planners they have interviewed and found out they just wanted to sell them insurance or were asset gatherers or mortgage brokers. Make sure if you get what you thought you were getting by asking enough questions to make an educated decision.

1. Can I see a completed financial plan you have created?

2. What areas of my financial situation will we work on?

3. Will you review and advise on my auto and homeowners policies?

4. What about my wills and trust?

5. Do you include tax planning?

6. How are you paid? Commissions’, fees or combination?

These and many more general questions will assist you in hiring a trustworthy financial planner. Make sure you have a list of questions you want answered before hiring someone and don’t move forward till you get satisfactory answers.