How to Identify Financial Professionals for Individual Tasks

Identify individual advisors to help with financial planning

You may not be at the point where you need a professional financial advisor to help with and coordinate all your financial planning, but you should seek out professional advisors for individual goals or pieces of your plan. Identify specific areas of your personal finances that you feel could benefit from having the advice of an experienced professional in the industry.

Common advisors needed by most people

Since these planning areas are important and impact everyone, the following advisors should be considered as a starting point. At the very least, you should consider a consultation (usually free) with the following professionals.

  • CPA for Tax Advice - Although not everyone pays taxes, everyone has to. So if you want to both stay out of jail and minimize your tax obligations, a CPA is an important advisor to have in your stable. (May not be necessary if you file form 1040ez and have few or no itemized deductions)
  • Insurance Rep for Life/Disability Insurance - Another area that everyone needs, life and disability insurances are often underfunded by the average person. Whether you like it or not, you are going to die, and your chances for becoming disabled to the point where you can't earn a living are much higher than you think. These insurances help protect against those catastrophes.
  • Estate Attorney for Trusts, Wills, and Estate Planning - Along the same theme, you need an estate plan to provide direction after your death. Your estate plan won't just handle the distribution of your assets, but will also provide for the care for your children, decide who they will live with, and also can provide for directions for your medical care should you be in a coma. Most people won't need a trust, but everyone needs a will.
  • Investment Advisor for Retirement Accounts - Hopefully, everyone reading this blog will have a nice, long, comfortable retirement. That's one of the whole points of  But you'll need to have saved for it early. You may not be at a stage where you need a stock broker or full certified investment planner, but having someone to bounce ideas off of and help you set up accounts and start investing can be invaluable. RoboAdvisors, representatives of inexpensive brokerage accounts, and your bank/credit union can all provide you with help.

Why advisors are so important

Financial planning and decisions should be based in a purpose; on the goals, values, and priorities in your life. As a result, personal finance is far more subjective than objective.  It’s more personal than finance. Even though your emotions and desires should be at the center of your financial plans, there is value to having an objective financial advisor in your corner.

You should still be in the driver’s seat as the decision maker, but an advisor can provide you with objective alternatives and opportunity costs that you may not have considered. Whether that be a tax advisor, an insurance agent, or someone to help you optimize your budget; a good professional advisor can help you to save or earn thousands of dollars more than you otherwise would have.

5 Questions to Ask

Before hiring an advisor, here are some questions and considerations you should take into account. Ask these during the initial consultation, but also keep informed about each question as you continue your relationship with the advisor.

1.      How are they paid?

There is nothing wrong with an advisor being paid, even being paid a lot. Hell, they have to earn a living too. Understanding how the advisor is paid, however, will help you get an understanding of how their biases or conflicts of interest might influence their advice. If your insurance agent gets paid every time they write a new insurance policy, that might be influencing their advice to cancel your old policy and create a new one rather than simply adding to your old policy. Understanding how someone is paid can help you to determine if they are advocating for you or advocating for their paycheck/company.

2.      Do they educate you?

You are hiring an advisor because they know more about a subject than you do, but that doesn’t mean they should retain all the knowledge and expect you to just trust them. Ask questions about the advice you are getting and how it works to achieve your goal. If you don’t feel that they are doing a good job about educating you and helping you to understanding the strategy and methodology behind their advice, then you might want to consider another advisor.

3.      Are they listening or pushing?

Sales gets a bad rap because so many bad sales reps push products instead of listening to the clients. An advisor should spend most of their time listening to you, asking follow up questions, and ensuring they understand your goals. If you feel they are jumping to pushing a product too quickly, then you may not have a good advisor fit. Ask them to summarize the details of your goals and what you are trying to achieve, then ask them to explain how their advice fits into that goal. If they can’t do both of those things, then it’s a potential problem.

4.      Do all their answers seem the same?

Annuity and insurance representative are notorious for this. No matter what the goal is, their answers are always ‘purchase an annuity’ or ‘buy this type of insurance.’ If your advisor’s strategy for every goal you bring them is a different flavor of the same basic financial tool, it’s likely that your advisor is advocating for their paycheck/company and not for you.

5.      Are there any complaints against them?

Search your advisors name and company to see what reviews and complaints come up. Realize that everyone has people who are not happy with them, but reading a variety of reviews and getting an overall sense of the advisor will really help. Additionally, almost all advisors are regulated by some authority.  Insurance reps are regulated by the state insurance commissioner. Investment advisors are regulated by the SEC, FINRA, and other bodies. Trust attorneys are regulated by the state bar.  Checking the regulatory bodies can go a long way to choosing the right advisor.

6.      Do you need a quarterback?

Identifying a single advisor that you pay a fee to for advice can be a big help. A fee-based advisor can help you to consider planning alternatives and make decisions without selling you additional products. If your advisor says you need a particular type of insurance, and then advises you to go find someone else to purchase it, the advice is probably more sincere since they don’t get paid.

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