Hiring a Financial Planner– Everything You Need To Know

Hiring a Financial Planner

First off I just wanted to say that you should always try to manage your own finances. A financial adviser is not for everyone. I know that most 20-somethings hate dealing with managing their own money. It’s so much more exciting to plan trips or work on a side gig then it is dealing with putting money aside. But it’s worth giving it a try. If you have one income with a few investments on the side, you can easily manage your own money and file your own taxes.

With that being said, the right financial planner can really help you take care of your finances while you focus on what you love doing in life.

Who should look into hiring a financial planner?

1. Someone in a complex situation. Some 20-somethings have very complex financial situations. Whether you inherit a lot of money (lucky you-know-what!) or run a transaction heavy business, you might be better off looking into hiring someone to deal with your finances.

2. Rich people. If you win the lottery, make a sex tape with a celebrity, or have made wise investment decisions at the right time, you could technically be “rich.” If you have more money than time, then yes a financial adviser can likely help you out.

3. Those with a busy life. If you work two jobs, work crazy over-time hours, have a stressful job, or have plenty of family obligations, then a financial adviser can be you savior. (Drinking every weekend doesn’t count as a busy life)

The steps to take before hiring a financial adviser to manage your money:

Setup a free meeting with a financial planner in your area.

It’s important that you don’t pay for the first meeting with a financial planner. The first meeting should should just be a feeling out process. You see what they’re all about. You ask questions. You figure stuff out.

Don’t be afraid to schedule meetings with many different financial advisers. It’s your money and you want to make sure it’s in the right hands.

Ask the financial adviser how they make their money.

You want to know how the financial adviser earns their money. If it’s commission based I’d be very wary. You don’t want to have the person that’s supposed to help with your finances attempting to push mediocre investments on you.

You’re better off going with a fee based financial adviser in my opinion.

It’s important that this gets answered. It’s usually one of the first things I ask anyone trying to sell me something– what’s in it for you?

Everyone works for money. It’s just good to know where this money comes from.

Lucky for you guys the money for Studenomics (all of the millions) comes from advertisers.

Figure out how the financial adviser communicates.

You can’t expect them to be on Twitter, but communication should be fairly simple. When hiring anyone I require a direct (or semi-direct) office number that is available during standard office hours. I don’t expect professionals to work all day everyday. There’s nothing wrong with having a life. But if I call them on a Monday morning I should receive an answer on the same day.

Would you date someone that didn’t call you back?

Get references & call them.

Ask for references. Call them. Ask important questions. The potential financial adviser doesn’t have to be perfect but make sure they get the job done. Communication problems, high fees, and poor reputation should all be red flags.

If you have any minor issues or notice anything suspicious then you need to address them with the financial planner. If you’re just skeptical of the person- move on. There’s many financial advisers out there. Find out that’s right for you. You want to be able to enjoy life without worrying about your money.

Treat this just like you would any other major purchase (i.e. trip or car). Ask all relevant questions. And if you’re not satisfied with the information you get, there are 7 more questions you can ask your financial planner. At the end of the day it’s up to you to decide to if hiring a financial planner to take of your finances is the right decision and which financial adviser is right for your situation.

Just curious: has anyone reading this ever had to hire a financial planner? If yes- how’d it turn out?

6 thoughts on “Hiring a Financial Planner– Everything You Need To Know”

  1. To answer the post sincerely, I have hired a financial planner several times. All of which were free to me, as I am a STRONG advocate of not paying full price (check out my post on it).

    I like that you dispel the notion only old people with lots of money require a financial planner. There are many sticky situations that require a little more finesse and knowledge that most of us have (even us PF bloggers!).

    Overall, I had mixed reviews. Some were very helpful, some simply steered me in the right direction, and others were actually wastes of MY time.

    1. Answers in reverse order.

      Edwin hit the nail on the head. You see a specialist because they specialize in that field. When there’s a lot on the line (your money), not fully understanding the complexities or mistaking regulations can result in costly mistakes.

      Only one in particular was a “waste of time” which now seems too harsh a phrase. It wasn’t a complete waste, I did learn a little. The planner focused on things I had no interest in, spoke on things I already knew about, and didn’t provide a clear direction as to my specific tax questions.

      1. Fair analysis on the specialist. It’s better to focus your energy on what you’re good at, as opposed to stressing yourself out over complex situations.

        As for the second part- Maybe that’s why the planner was free?

        1. Commission & Hourly planners will generally provide an initial consultation for me. It’s a way to meet each other and judge if there’s a good fit. I just happened to be prepared with an onslaught of questions.

          This leads into my final point. You may also want to add that going to an hourly planner doesn’t mean that you shouldn’t prepare as much as possible in order to get the most out of your 2-hr session (or whatever time frame). Don’t forget YOU are the one paying for each “uh” and “um” you utter.

  2. To me a financial planner should be well versed enough to come up with things you wouldn’t be able to yourself. For most financial topics you can do plenty of research online and at your local library. The one thing you can’t do by yourself is make connections without having the knowledge. For example maybe you are considering multiple investment choices and doing plenty of research on them. What a financial planner would add is the tax advantages / disadvantages to all of these investment types based on your unique needs.

    The most important thing you say in this article is to find out how they are getting paid. A “financial planner” on a commission is just a salesman wrapped in the package of a financial planner.

    1. You absolutely can’t trust a financial planner working on a commission. Some of the investment products that I’ve heard “financial planners” are known to try to sell to naive young people are completely horrible.

      Personal finance bloggers may not have all of the answers, but hopefully we have the right questions for you guys. The right financial planner can really help you clear up a sticky situation. On the other hand, the wrong financial planner can set your financial goals back a few years.

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