What Are You Looking For in a Financial Planner?

Before you start your search for a financial planner, you should have an idea of what you are looking for. There's a very good chance that someone whose primary job is that of a broker or money manager can market what he or she does as a form of financial planning. For the purposes of this book, however, you want a financial planner if you are looking for an advisor who will look at and evaluate your entire financial picture. You want a broker if you are looking for someone to help you invest, without regard to the rest of your financial situation, and you want a money manager if you prefer to have an expert invest for you -- without your direct involvement or day-to-day oversight.

What this truly means is that titles matter less than services.
If someone says she is a "wealth manager" or an "investment counselor," she could fall under any of the three titles -- planner, broker, money manager -- as her primary business. It is your job to articulate what you want from an advisor and to make sure your final choice can meet your needs the way you want them met.

I recently saw a question posted on an online message board about someone who was "... mostly looking for the money manager [emphasis added] to actively manage a portfolio for me. As well as manage my personal finances, how much I should be spending everywhere etc., based on what I'm making, etc.... How much of my assets to invest in certain ideas, final judgment on going through with certain ideas, making sure I don't do anything stupid or fall for any scams, etc."

As you will see if you are interested in hiring money managers and read the chapter on interviewing them, this guy wasn't really interested in hiring a "money manager" at all. He didn't want someone to come in and take over a big chunk of his portfolio, he wanted someone to review his personal finances and investments and help him develop a strategy for the future. He wanted, in short, a financial planner, even though he was saying something different.

Remember, too, that when you hire a financial planner, you may be getting one who can perform many advisory functions, including that of a money manager, an insurance agent, and even an accountant/tax preparer. Or you might be getting someone who simply does the financial basics and leaves execution and specialization to other experts.

Can I Do This on My Own?

Most people only turn to a financial planner when they have already found something they don't do well on their own.

Truth be told, there is nothing that a financial advisor can do for you that you can't do on your own, or with the help of some good books, computer programs, or online services. The problem is that most people don't rely on those resources, and instead try to make do, until they have problems or enough money that they fear creating problems.

That said, if you have a hard time settling on a financial advisor, you may decide you want to step up and do the job yourself. But go strong or don't go at all; after all, you decided to seek help to avoid trouble, so you must be sure that you have the ability to sidestep it on your own.

By Chuck Jaffe
Chuck Jaffe is a senior columnist and host of two weekly podcasts at MarkWatch. He has also been a guest speaker on several television and radio shows.

Copyrighted 2020. Content published with author's permission.

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