All too often we find the worlds of health care and finances colliding these days. And just as in medicine, it’s a very good idea to seek a second opinion when it comes to your financial well-being. The economy has been on a roller coaster ride in recent years, but that shouldn’t deter you from consistently working towards a financially secure future. Given recent events, you may be wondering what to do next. Stay the course and keep all investments where they are? Move everything now while things are calmer? Explore new options with fresh eyes? If you are evaluating your current financial health and the economy, and you want make some sense of what to do next (if anything) – start by getting a second opinion.
You may be satisfied with your current investments, but wondering if there are some new opportunities out there. You may also be comfortable with your current financial advisor and how he/she manages your money. But even with the hope of a better economy on the horizon, now is not the time to become complacent. Here are five basic questions to help you determine if it is time to take a “second look” at your financial future and your advisor:
- How is your financial advisor compensated? Is the advice you receive based solely on your best interest, is it driven by commissions, or is there no way for you to tell? People who provide service for a fee, such as CERTIFIED FINANCIAL PLANNER™ professionals, are required to spell out how they are paid and any potential conflicts of interest. People who sell securities, such as stockbrokers, have requirements generally seen as less stringent. Investments they recommend must be “suitable” for their clients, which can be considered a rather vague guideline. It is important to note that any state registered investment advisor representative can use the title of “Financial Planner;” only an individual who meets certain education and training requirements can call themselves a CFP® professional.
- What does this advisor know about you? Before making recommendations, has this person recently asked you about your life goals, your values, your health or your family? When do you plan to need money for retirement, college, or a career move? Your circumstances may change over time, and your financial strategies need to be updated to reflect and meet your changing needs.
- What are your advisor's experience and qualifications? What licenses or certifications does your advisor hold? What are the resources of his or her firm? I recently was asked for a second opinion on a financial plan proposed by someone described only as a "Financial Planner," not a licensed CFP®. I learned that the plan was prepared by an employee of an insurance company, which made the plan’s options rather limited.
- Does he or she have other investors with assets and interests similar to yours? This is a good question to ask because it will show you if your particular advisor is adept at handling financial situations similar to your own.
- In what state or states is the advisor licensed or registered? If you are thinking about certain savings vehicles for college, or have multiple residences in different states, it’s a good idea to have a licensed professional with knowledge of those state laws and guidelines.
Just as it is with finding the right medical care and the right schools for your family, the careful choice of your professional financial advisor can make a lifelong difference in your financial independence. And it’s never too late to make improvements to your financial strategies.
It is also important to understand getting a second opinion is not disloyal. Your current advisor should welcome the opportunity to have her/his good service and counsel validated by a qualified third party. There is a very good possibility you will stick with your current financial professional and are essentially solidifying your decision to stay where you are.
Pick up your last statement and take it out for a visit with someone new, either through a personal referral or look online for advisors near you on one of the following resources.
Financial Planning Association
Certified Financial Planner Board of Standards, Inc.
Financial Industry Regulatory Authority
Expect to spend some time. Your first priority is to get all the answers you need. You and your family will benefit from your efforts.
Heidi Clute, CFP® of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm and registered investment advisor that provides strategic financial and investment planning for individuals and small businesses in the Lake Champlain Valley region. The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations. For a list of states in which we are registered to do business, please visit www.clutewealthmanagement.com.