There are hundreds of advisors in the state of Maryland, all claiming to have expertise in financial planning.
How do you find the one who has the experience and education you expect, and who you know will put your best interests first?
From our perspective, effective financial planning requires a personal relationship – a partnership involving close and continuing communication.
As a result, the first step in winnowing the field down is to only consider a Financial Planner in Maryland, that is close to your area so that you can have face-to-face contact.
Here, we address some foundational principles and then provide you with some guidance on how to choose the best planner in Maryland – for you.
Do They Have To Be a Certified Financial Planner™?
Based upon frequent media promotion, you may be wondering if you should only choose a Certified Financial Planner™(CFP). The answer is, not necessarily.
The CFP credential and involvement with the Financial Planning Association provide strong indications of a planner’s ability to provide quality service with high ethical standards; however, there are other designations indicating advanced academic training in financial planning by various educational institutions and professional associations sponsored by the insurance and accounting industries.
All planners are supposedly held to high technical and ethical standards by regulatory bodies or one of these associations, so determining a prospective planner’s qualifications or certifications is a good starting point, but only that.
In addition, it is critical that you perform your own due diligence to make sure that you pick a financial planner who has not only the necessary experience and qualifications, but also one that you trust and feel comfortable with.
Despite the onset of robo advisers and computer-based planning tools, we still believe that professional financial planning is a people-centric business built upon long-term relationships.
Finding the Best Financial Planner for You
It would seem to follow then, that if all Financial Planners are held to high professional standards and typically claim that they can provide similar levels of service, you are at little risk in choosing one.
It’s important keep in mind, though, that you are selecting the best one for your particular situation.
Whatever their designation, it is important to meet with them in person and ask relevant and important questions regarding how they would propose working with you to achieve your financial and life goals.
That requires a bit more winnowing, and it helps to know the most critical factors to consider. Here are six things to look for when choosing the best Financial Planner for you.
1. Background and Experience
As already mentioned, a planner’s background credentials must be examined. As part of this process, we would recommend that establish whether the planner is also a Registered Investment Adviser under the supervision of the Securities & Exchange Commission.
You can then check online to determine if the individual or his firm have been the subject of any complaints or investigations that have resulted in disciplinary actions.
Experience is equally, if not more important. Determine if they have been preparing formal financial and retirement plans for 5-10 years at a minimum.
Who are their clients? Do they share similar circumstances as your own? You need to know that your financial planner can relate to your specific needs.
Are they just interested in getting control of your assets for investment purposes, or can they provide guidance in all aspects of your financial life?
Can they assist with trust and estate planning, insurance, educational funding and philanthropic goals?
Ask to speak with a couple of clients with similar profiles as yours to get a sense of who he or she works with. If they are unwilling to do so, move on.
Most wealth advisers assume the dual role of financial planner and investment adviser. You should examine records revealing past performance over several market cycles on portfolios having similar risk profiles and asset allocations.
This requires a bit of sophistication since most managers promote the concept that the client should be seeking the highest returns, often without proper regard for the level of risk involved.
Professional financial planning integrates long-term future needs and acceptable risk into the process of managing the investments.
Beating a benchmark should not necessarily or automatically be the desired end point. Many times, less can be more if it provides greater certainty or probability of satisfying client life goals. Discuss the planner’s approach to this issue to determine the philosophy employed.
4. Planner or Product Pusher?
In your search, you will find a lot of people who call themselves “planners” or “advisors”, but their primary interest is in promoting a specific product or solution.
This is often characterized by a one size fits all mentality.
If the planner sells products, it would be important to get full disclosure on how he or she is compensated to determine if there are any hidden incentives that would influence the planning outcome.
5. Fees or Commissions?
As a corollary point, planners, investment advisers and wealth managers can be compensated by fees, commissions or both.
Fee-based planners are usually independent and only receive the fees you pay them and are incentivized to provide the best products and services that will enhance your assets at the lowest cost without any consideration for their interest.
They function under the principles of fiduciary law. Commission-based advisers are generally not held to the same standards and may be motivated to recommend what will compensate them the best.
Some planners receive a combination of fees and commissions, and it is important that you receive full disclosure on all fees and expenses that you might incur so as to determine that you are being treated fairly.
6. How they handle the Interview
You should interview several candidates so you can compare all of these factors. This will enable you to learn about them, their approach to the profession, how they work with clients, how they get paid, and what you can expect from them.
An important flag: if the planner does all the talking to promote his/her abilities without first spending time to explore your circumstances, goals and, concerns, you should be alert to the probability that your planning process will not be as personally customized as you might want.
Once you narrow the field down using these parameters, you can be confident in your choice of the best financial planner for you.
This information will help you avoid the most common mistakes individuals make when searching for a financial planner.
Failure to apply these common sense guidelines in performing your due diligence can prevent you from achieving your life goals and often leads to a frustrating and unproductive relationship which, in the long run, can be very costly.
Guilty of one, a couple, or all of these mistakes? Now is the perfect time to do something about them.
Consider professional financial planning services based upon fiduciary principles and highly personalized guidance today—undoing the impact of these mistakes, requires great technical know-how. Let Calvert Investment Counsel help you out.
Call today 410-435-3270 or click here to schedule online.