Creating Your Personal Financial Goals

Author Barbara Stanny once said that, “A good financial advisor wants an educated client.” This not only pertains to understanding what you want out of an advisor, but also how you see yourself. Knowing what you want your financial future to look like is a very important aspect of choosing the right financial advisor. You work hard each week to support your family and your lifestyle, so it is important that you know what you want your life to be like down the road.

Your goals can be broad, such as wanting to be able to travel upon retirement, or they can be specific, such as wanting to buy a new car within the next few years. Below are some things to consider before you meet with a financial professional. Write down your goals and bring them with you to the interview.

What specific things do I wish to save for?

Examples: buying a new car, a down payment on a home, vacation, sending your kids to college,

paying off credit card debt, planning for retirement.

How much progress have I made toward obtaining each of these goals to date?

Include how much you have saved, where your money is located and how much money you owe.

How soon do I wish to accomplish these goals?

Break each goal into short-term (1 year or less), medium-term (1 — 3 years) or long-term (5+ years)

Knowing your priorities is essential, and should be communicated during your interview with an advisor.

Preparing for the Interview

Once you have stated your financial goals you are well on your way to your meeting with a financial advisor! As stated earlier, WiserAdvisor matches you to several financial advisors. It is important that you give consideration to each advisor so that you can be comfortable with making the most informed decision. This section is aimed at giving you some basic guidelines on what to expect, what to ask, and what you should know about your financial advisor. Make sure to write these questions down and bring them to your interview. Have the advisor answer as much information as possible, and write down the responses so that you are able to compare several advisors objectively later on.

The National Association of Personal Financial Advisors (NAPFA) has compiled a set of questions that can be accessed on their website. Make sure to print out these questions to take with you to the interview. Also, keep in mind the following:

What Services Do You Provide?

Cash management & budgeting?

Tax planning?

Investment review & planning?

Estate planning?

Advice regarding insurance needs?

Retirement planning?

Recommendations for investments or investment products?

Anything else?

What licenses or qualifications do you hold?

Do you hold professional certifications or designations?

How long have you held each of these?

What states are you licensed in?

What types of investments are you licensed to offer?

Do you belong to any financial organizations or societies? Which ones?

How would you prepare my financial plan? Qualified advisors might use the following methodologies:

Gathering current financial data

Setting goals and understanding risk tolerance

Analyzing and evaluating financial status

Developing and presenting a full range of alternatives and their particular recommendations

Preparing a written plan

Counseling on how to implement the plan

What continued services will I receive after the initial plan?

Do you sell financial products?

How often do you send out portfolio reports?

What are your market research methods?

Will I continue to receive written analysis of my financial situation and your recommendations?

Will you provide continued advice on non-investment financial issues?

Do you take possession of, or have access to my assets?

Look for a financial advisor who provides ongoing services to advise and assist in your plan’s implementation as well as future plan revisions.

What are your typical clients like, and how have their portfolios performed?

How many clients do you have? What is the average portfolio size?

How have portfolios of clients similar to me (risk, portfolio size) performed?

One year? Five years? Ten years? (make sure that performance takes the advisor’s fees into account)

Compared to inflation rates?

How had performance fared in recessionary periods (if the advisor was in business):

July 1981- November 1982

July 1990- March 1991

March 2001- November 2002

The next important area of questioning has to do with how the advisor is paid. At this point, your examination of what services the advisor provides should have given you a basic idea of how much value you would derive from them. Now, by finding out about the advisor’s fees, you can see whether you expect to get your money’s worth by hiring him/her. You should ask:

How is your compensation calculated?

Do you provide an initial meeting at no cost?

Financial professionals generally provide a free initial meeting

How does the advisor charge for the services?

Hourly rate

Flat fee

Percentage of assets

Commission (fee per financial product sold)

Is the fee schedule flexible?

Ask for a written estimate of what the fees will be

Hopefully, by having these questions answered, you will have a good idea of whether an advisor provides the services you desire. Look for a very strong fit here, but keep in mind that the more extensive the services are the more expensive they will be.

What About Your Credentials and Record of Integrity?

The advisors that you visited probably told you of their numerous qualifications. To learn more about what each license and designation means, visit our designation page.

There are two main sources of information that will help you to answer this question: government agencies and fellow clients. Any financial advisor who provides advice about securities must be registered with the Securities and Exchange Commission (SEC) and/or the state securities agency, depending on the total value of assets under management. Most advisors will provide a roster of clients who can share their experiences with you.

Obtain a copy of the advisor’s registration form, Form ADV. Part 1 discloses information about the advisor’s education, business, and whether the advisor has had problems with regulators or clients. Part 2 outlines the advisor’s services, fees, and strategies. You can get Form ADV from the advisor, the SEC, or the state securities regulator, depending on the size of the advisor’s business.

Call your state securities regulator to see if the advisor has a record of complaints. You can also verify the advisor’s educational and professional background. The North America Securities Administrators Association (NASAA) can be reached at 202-737-0900. They can give you the phone number of your state securities regulator.

Check on your financial advisor’s credentials using these resources:

The National Association of Securities Dealers (NASD) at 800-289-9999 also provides information about the advisor’s licensing and any consumer or regulatory complaints.

Call the Securities and Exchange Commission (SEC) at 1-800-732-0330 to verify that the advisor is registered with the SEC.

The Certified Financial Planner (CFP) Board of Standards at 888-CFP-MARK(237-6275) will verify whether an advisor has earned the CFP designation. You can call the CFP Board of Standards (303) 830-7543, ext. 219 to check on license and disciplinary record of Financial Planners.

Call (202) 737-0900 to obtain a state securities commissioner’s phone number.

You can also call (800) 732-0330 to see if an advisor is a licensed RIA.

The American College at 800-368-4684 will verify a Chartered Financial Consultant (ChFC)

or Chartered Life Underwriter (CLU) designation.

You can reach the National Association of Insurance Commissioners (NAIC) at 816-842-3600 to verify whether

an advisor is licensed to sell insurance in your state.

After the Interview

Now that you have met several financial advisors it’s time to start reviewing the information that you’ve received in order to make a final decision. Remember: make sure to select advisors based upon their qualifications rather than their personalities. While selecting an advisor that you get along with is important, it is even more important that they have the skills and knowledge to effectively handle your investments.

Review the qualifications that each advisor listed. Did anything stand out for each advisor that made you uneasy? Reassured? Make notes of such sentiments while you draw comparisons. Did the advisor listen to what your goals, risk tolerances and questions were?

If the advisor provided you with the names of client references you will want to look for satisfied long-term customers. Basic questions to ask references include:

How long have you worked with the advisor?

Have you been satisfied with the service that the financial advisor provides?

How often do you hear from the advisor? Who initiates calls and what are most calls about?

Does the advisor respond to your questions and your calls?

Has anything about your relationship surprised you or disappointed you?

What do you think the advisor does best? Worst?

An advisor’s track record is the best indicator of what the advisor will do for you. Explore further if there are any differences between what the advisor told you and what their references told you. And if the references say that the advisor has been great, then chances are you would feel the same about his or her services.

Making A Decision

If you have gotten this far, then you have just about all the information you will need to make a decision regarding which advisor seems the best for you. Don’t settle for someone you are unsure of because there are many advisors to choose from. You should be able to find one with a strong track record of providing the services you need at a reasonable cost. Most importantly, you should feel comfortable with the professional that you choose. You want someone that you have confidence in; after all, this is your money that we’re talking about. No matter what his or her title is, your professional should seem like the right choice to you.

To get contacted by your ideal financial advisor, click here

* Financial Advisors in our network may be dually registered; advisors, in addition to being registered as an RIA, may also be registered representatives offering securities through broker dealers.