How to Hire A Financial Advisor

8 Signs That Now Is The Time To Hire A Financial Advisor

Financial planning tends to receive a lot of attention when things get messy. When markets begin to crash, and the world goes through instability, people begin to question the quality of their financial decisions. When is the best time to hire a financial advisor?

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Topics like asset allocation, risk management, lifestyle planning, and personal finance have become hot topics. Financial planning also gains importance when a person approaches retirement, or if you have over $10 million to invest, in that case, you should check out this special Guide for $10+ Million investors.

However, at Pillar Wealth Management, we believe that financial planning is not an event-driven concept, especially for those with $5 million to $500 million in liquid assets.

To us, financial planning is something that keeps you calm when there is panic all around, helps you through significant transitions in life, keeps you from feeling lost, helps you with retirement, and most importantly, helps you achieve your financial goals.

If you feel that you want to work with a financial planner, either because you are facing plenty of questions, do not have enough knowledge or expertise in specific areas, or simply do not have the time to become an expert, then gaining more insights about financial planning is a good first step.

In this article, we will discuss several important questions that can be helpful when you decide to hire a financial advisor in detail so that you can make smart choices. Let’s begin!

What is the difference between a financial advisor and a financial planner?

Both financial advisors and planners provide financial services, but advisors are more focused on investments, while planners take a more holistic view of financial planning.

Do I need a financial planner or can I do it myself?

Although you could benefit from the advice of an expert, you can create an investment portfolio on your own if you understand markets and the various investment vehicles available.

Is it smart to use a financial planner?

Using a financial planner is useful for inexperienced or risk-averse investors and for individuals with very specific goals, such as creating an estate plan with a trust.

What should financial advisors avoid?

Financial advisors should avoid talking down to their clients, putting their own interests first, hiding fees and charges, and selling you something you don’t need.

Can you retire without a financial advisor?

Yes, you can create your own retirement portfolio by setting up an IRA with an investment brokerage. You may have a contribution plan with your employer, as well.

How long should you stay with a financial advisor?

You should stay with your advisor as long as you’re “getting your money’s worth”; they are transparent about their fees and are genuinely caring about helping you meet your goals.

What percentage of retirees use a financial advisor?

According to a recent study, only 35% of Americans (of all ages) have an advisor although starting early with an advisor increases your chances of meeting your goals as you benefit from their advice.

What is better than a financial advisor?

A fund manager may have more experience and be more knowledgeable than many other advisors. Also, being a manager of a team of advisors could be considered “better.”

Why do clients leave their financial advisor?

Many clients leave their advisors because of poor communication; they may be dissatisfied with the return on their investments, or they don’t feel the advisor is sufficiently transparent.

Should I use a financial advisor from my bank?

It’s perfectly OK to use your bank’s financial advisor for your financial needs, but they may not offer the breadth of products available at an independent firm.

When is it time to work with a financial advisor?

If you have just graduated from college and are about to begin your first real job, you do not have much to worry about. All you have to do is pay your rent, buy groceries, and collect your paycheck.

Of course, you also have to save money and invest it in the future. But, there are no complex financial decisions to be made. For such cases, a financial planner is not necessary.

But as you grow into your career and start accumulating wealth, things change. You buy real estate, you get married, your kids start going to school, you start a business, and life begins to happen.

Your financial life becomes more complex, and you start thinking about taxes, paying off student loans, and perhaps managing your credit score. At Pillar Wealth Management, we deal with these topics every day for clients with $5 million to $500 million in investible assets.

If you have inherited a large business that has been with the family for generations, then at some point, you start thinking about succession planning. Many high net worth individuals are also dedicated to philanthropy or to a cause that matters deeply. As Warren Buffet once said, “giving money away is more difficult than making it.”

Then there are also other topics like insurance, risk management, and the legacy you want to leave behind. Read about specific financial questions that high net worth individuals with $5 million to $500 million in liquid assets face in this complimentary book on selecting the best financial advisor.

Unless you are an expert on investment management services, accounting, estate planning, and retirement planning, you probably cannot make the most optimal decisions yourself as you used to when you were a newly graduated young professional.

Hutch and Chris at Pillar Wealth Management have over 60 years of combined experience in handling various complex financial decisions. Feel free to reach out to them to start a conversation.

Different Types of Financial Advisor

All financial advisors are trained and experienced in providing financial services; however, they don’t all have the same certifications. Some are certified financial planners (CFPs) or chartered financial analysts (CFAs), and some may be certified public accountants (CPAs) as well. The FINRA website provides a complete list of certifications.

As you can see, you have plenty of choices, and by doing some research, you’ll be able to see the differences between these certifications. When you meet with a potential advisor, you can ask them about their training, work experience, and certifications.

A robo-advisor provides low-cost investment advice online. Based on your financial situation, a robo-advisor utilizes a computer algorithm to create your investment portfolio. Robo-advisors are great for beginners or investors with straightforward investment goals.

Online financial advisors act like robo-advisors, but they also offer additional advice from human advisors for investors who need help with managing their portfolio. They may be assigned to either a team or a dedicated advisor. Online advisors have the skills to help you create a financial plan and select investments.

A traditional financial advisor is an advisor who will meet with you in person to advise you on investment management, retirement planning, and any other financial service you may need. Moreover, they may use outside consultants for specialized services, such as a lawyer or accountant.

Financial advisors may or may not have a fiduciary duty, which is important; you want to be sure the advisor acts in your best interests at all times. Certain designations imply a fiduciary duty, such as CFP and RIA.

Another important factor to consider is the advisor’s compensation model. Fee-only advisors are paid only through client fees, so they are unlikely to have conflicts of interest.

An advisor who earns commissions is less likely to recommend the products that are best for your situation. Still, they will recommend products that are suitable. Insurance products are usually sold on a commission basis.

Choose the Financial Advisor Services You Need

Financial advisors offer a variety of services; a major area of expertise is investment management. If the advisor is a broker, they can buy and sell securities on your behalf. It’s good to know about the advisor’s approach to investing, whether passive or active, or they may use both depending on the type of investment.

Your financial advisor will build a financial plan based on your specific financial situation, which will include strategies for achieving your financial goals.

In particular, your advisor can create a retirement plan for you to ensure you have the income you need when you retire.

You may want your financial advisor to help you with tax planning, estate planning, and philanthropy. Your advisor can help you with debt management, preparing your tax returns, or purchasing insurance.

How much does a financial planner cost?

If you are considering hiring a financial planner, you must surely have wondered how much a financial planner costs. Financial planners generally charge a fee for providing their services. Hence, money matters, so you can choose the most suitable payment model for you.

This fee can either be based on an hourly rate or a fixed amount based on pre-determined milestones. A time-based model is when the financial planner does work for a certain amount of time and then bills those hours to the client.

A milestone-based model is one where the financial planner and the client determine a set of milestones along with timelines for each milestone. Once a milestone is completed, the amount of compensation for that particular milestone gets released.

Then there is the assets under management (AUM) model in which the fee is a fixed percentage of the total assets that are invested through the financial planner.

This structure has the most transparency because the fee percentage stays the same no matter whatever services are rendered. The fee amount changes according to the value of the assets.

So, in a way, the fee amount is aligned with the performance of the portfolio. The more the portfolio grows, the greater the fee amount. For example, 1% of $10 million is $100,000. But 1% of $15 million is $150,000.

Pillar Wealth Management follows this model. You may get in touch and have a free consultation to know more.

There is also a compensation model where no fees are charged. This sounds very attractive in the beginning. However, financial planners also have to make a living, and they have to get paid one way or another.

The way they get compensated is through commissions. Whenever the client purchases an investment product recommended by the financial planner, the company that sells the product pays a commission to the financial planner.

The benefit of this model is no fee to the client. However, the big downside is that the incentives for the financial planner are not aligned with the client’s best interests.

For example, a financial planner may end up recommending investment products like a mutual fund or an insurance policy that the client does not really need. The financial planner may do so to earn a commission.

Remember that fees are not the same thing as costs. Costs are something that the client will incur for making investments or carrying out transactions. If you want to know more about the difference between fees and costs, then make sure you download this complimentary book about choosing the best advisor for investors with $10 million or more in liquid assets.

What benefits can you expect from a financial planner?

A financial planner is someone who helps connect your financial decisions to your financial goals. A good financial planner will carefully understand every single aspect of your financial life. Based on the inputs, he/she crafts personal financial planning that touches upon multiple topics like financial security, tax planning, retirement, succession, estate planning, etc.

The ultimate goal of this strategy is to enable you to reach your financial goals. A financial planner should help you make smart decisions that will impact your life for years to come.

The holistic approach of professional financial planning involves multiple subject areas, each of which would usually require the services of a dedicated professional. However, co-coordinating the work of multiple individuals is time-consuming and complex.

With a dedicated financial planner, you deal with one person. For example, at Pillar Wealth Management, either Hutch or Chris, the founders of Pillar WM, will work with you to work out every single aspect of your high net worth portfolio. Feel free to start a conversation with them to know how they can save you time and money.

A financial planner is also someone who is up-to-speed with what the markets are doing, where the economy is headed, and where assets should be allocated.

The right asset allocation can help minimize the drawdowns that hit investors during every economic downturn. They do this full-time for a living and are more knowledgeable than someone who runs a business and tries to study the market part-time.

Financial advisors can make smart decisions about where to invest, how much to invest, and how to minimize the cost of those investments. Very few people concentrate on the cost part, but it can be a significant factor when large sums of money are invested over long periods.

In fact, if you can spare some time, then we recommend that you download this book on improving portfolio performance for high net worth portfolios between $5 million and $500 million.

It explains how portfolio performance isn’t just about generating a higher rate of return. It is about approaching portfolio management from a much broader perspective.

Any financial advisor can make a financial plan and help clients make investments. But, the work of the best financial advisors does not end there. The elite-level financial advisors regularly update their clients on how they are progressing towards their life goals.

They make a commitment to do whatever it takes to keep their clients on track. If changes need to be made, then they will communicate their thoughts with the client right away.

This personal touch and an element of hand-holding is another important benefit of a successful financial planner.

If you have been wondering what benefits can you expect from hiring a financial planner, then a one-word answer is – many.

How do I find the best financial planner near me?

Working with a certificated financial planner (CFP) to obtain customized financial advice and planning will to help you feel more secure, so you do not have to worry about going bankrupt or running out of money.

It is like working with an IT expert that provides deep research on a website. Especially when you run a business, the IT expert will focus on some essential elements, for instance, measuring add performance, analyzing the market for audience insight, measuring content performance, working with partners to process data, and so on. In content measurement, the IT staff may upload Getty images, etc.

This is similar to when you have the support of an investment advisor, certified financial planners, financial advisors, or Robo advisors.

And you can work on the financial planning that you prefer. CFPs work based on their clients’ interests, putting them as their first concern. Therefore, as a client of a certified financial planner, you should not worry that your planner will do something that can harm your assets.

CFPs have fitness standards to ensure they work based on the values defined by their certification, which is why you should investigate a planner’s credibility before deciding to work with him or her. By so doing, you will avoid any negative effects on your finances that would unnecessarily impact your financial future due to incompetent wealth planning. So, as a high net worh individual, you will benefit if your advisor is able to develop decent wealth planning. Otherwise, you could lose a lot more money than ordinary people. You should also pay great attention to your monetary plans by working on estate and retirement planning, life insurance, and investments so you can achieve the financial goals that you dream of.

In brief, there are two things that you need to consider when looking for the best financial planner near you. First, the financial planner has to be among the best. Second, they have to be based at a convenient location, preferably close to where you are.

If you want to delve deeper into what makes a financial planner the best when it comes to managing high net worth portfolios, download our guide: The Ultimate Guide to Choosing the Best Financial Advisor: For Investors With $5 Million to $500 Million in Liquid Assets today.

If you are a high net worth or an ultra-high net worth individual, then you want to find the best financial planner for high net worth portfolios. One of the easiest ways of finding such a financial planner is to speak to other high net worth or ultra-high net worth individuals in your personal network.

The chances are that some of them may already be working with a reputed financial planner.

You can also get in touch with your relatives or family members. They will give you an honest review about good financial advisors that they know of.

You can also schedule a conversation with Pillar Wealth Management, a fee-only fiduciary financial advisor that specializes in portfolios ranging from $5 million to $500 million.

Other ways of finding the best financial planner would be through your own research. The CFP professional website is a great source to find certified financial advisors by zip code.

So, you can find financial advisors who are within a pre-defined radius of your location. The CFP website is for US-based financial advisors. If you happen to live outside the US, then you can access the relevant Financial Planning Standards Board (FPSB) website. There are FPSB websites for individual countries.

If you want to search financial advisors by compensation models, then the NAPFA website is particularly handy. NAPFA stands for the National Association of Personal Finance Advisors.

Its database allows you to screen financial advisors based on their fee structure. The same applies to The Financial Planning Association. FPA’s website also allows you to filter financial planners who are fee-only. So, if you want fee-only financial advisors in a specific location, then you can find a list on NAPFA and FPA (Financial Planning Association). Besides, these advisors are monitored by the U.S. Securities and Exchange Commission (SEC) to ensure that they always deliver their job based on the fiduciary standard.

Other places to find the best financial advisors are Garrett Planning Network and Boomrater. Garrett Planning Network allows you to search for CFPs that work on an hourly fee model.

Thus, there are multiple answers to the question “How do I hire a financial advisor?”.The best answer is the one that works for you.

Hutch Ashoo and Christopher Snyder are the expert founders of the independent, fee-only, and fiduciary wealth management firm Pillar Wealth Management. They will provide you with customized wealth planning that is specifically made for your needs.

If you would like to speak with them or simply ask any questions about how custom and trusted wealth management advice is offered to high net worth individuals with $5 million to $500 million in investible assets, then feel free to start a conversation.

Authors

Hutch Ashoo

Chris Snyder

To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.

We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.