What to look for when appointing a financial planner

In a perfect world, your relationship with a financial planner develops as you get older, and your financial goals change. Hopefully, your initial financial planner will be able to assist throughout your adult life, but this is not always possible. In reality, you may need to change financial planners to accommodate specialist skills required at specific times in your life.

It is also important to note that while a financial planner and a financial advisor are often the same, this is not always the case. For example, a financial advisor may be able to help you on specific issues but maybe not assist with long-term financial planning. So, what do you need to look for when appointing a financial planner?

Experience

We live in an age where the Internet is all-powerful, and, in some circumstances, experience is often dismissed. However, for many years now, the financial life-cycle of an individual has remained relatively consistent with particular risk profiles in the early days and greater dependence on income in later life. How these goals are achieved may change, but your financial planner must have experience. Of course, there is a considerable difference between practical experience and academic experience, although, in an ideal setting, you would find a balance between the two.

Skills

The world of finance takes in a vast array of options, with many subsectors requiring specific skills. You tend to find that most financial planners will specialise in particular areas, whilst maybe having a general understanding of other markets and products available. Many financial planners will be part of a large company that may include various departments with specialist advisors. While using their particular skills to assist individuals in planning their finances in the future, clever financial planners will also use the services of qualified individuals around them.

In the words of Steve Jobs:

“It doesn’t make sense to hire smart people and tell them what to do. We hire smart people so they can tell us what to do.”

Ethos

Even though the traditional financial life-cycle of an individual is relatively simple, you must match your financial goals with the financial ethos of your planner. So, for example, there is potential for more adventurous investment in the early days, a more balanced approach in the mid-term and a greater dependence on income in later life. Of course, this is not the same for everybody, but it gives you an idea of the typical financial aims.

When looking to appoint a financial planner, their ethos must be aligned with yours with regards to subjects such as:

• Investment duration
• Short, medium and long-term goals
• Investment vehicles
• Diversification
• Advice on taxation
• Reviewing and adjusting client financial targets
• Giving advice

If you approach a financial planner that was perhaps known for being more aggressive concerning tax planning, while you would prefer a more balanced approach, this would be a clash of financial ethos. Consequently, as more aggressive tax planning is part of the financial planners' DNA, it is difficult to see how this would work.

Emotional intelligence and empathy

There are two distinct types of financial planners, which are at different ends of the spectrum. First, we have the financial planner who gives cold hard advice as and when required, with little interest in the individual's life. While there is nothing wrong with this approach, so far as everybody is aware of the boundaries, other financial planners will take a greater interest in the overall picture. 

At some point in your life, you may require a degree of empathy from your financial planner, which might also incorporate what may be called emotional intelligence. Getting caught up in the moment can be very easy, letting your heart rule your head and potentially making the wrong financial decisions. Whether you take the advice of your financial planner or simply use them as a sounding board, emotional intelligence and empathy are valuable traits in an advisor. However, they must be able to take a step back from what can be a highly charged situation and give the best advice.

Independent services

There are two basic setups when it comes to financial advice. Firstly we have advisors that have a tied relationship with one or more specified financial service providers. Then we have those that can look at the broader market. At first glance, it is easy to assume that an independent financial planner should be able to get the best deals for your situation. However, in reality, this is not always the case. As a tied agent, a financial planner may be able to leverage their relationship to negotiate terms that may not be available in the public domain.

While knowing whether your financial planner is independent or has a tied relationship is essential, there is no absolute right or wrong in this scenario. Under strict regulations, any financial advisor/planner must reveal any third-party relationships that may affect the advice you receive. For example, do they receive a commission for business introduced?

Value for money

There is an old saying in the business world, "you get what you pay for", which is still true today. Consequently, value for money in the world of financial advice is relative to the quality of advice you receive. Furthermore, as we discussed above, some of the advice received in your early years may not come to fruition until you retire. Consequently, unless you can visualise your finances in the future, it can be challenging to appreciate the value of that early advice.

It is also essential to confirm the type of relationship available with a particular pricing structure. This may be relatively cheap if you are looking for a financial planner to sit down once a year and go through your finances. However, if you are looking for a financial planner you can speak with throughout the year, a financial sounding board and someone proactive rather than reactive, this relationship is likely to attract higher fees. 

While the term “horses for courses” is maybe a little basic, it does illustrate the need to find a financial planner that is on your wavelength and able to provide the exact services you require.

Summary

There are numerous qualities and skills you need to look out for when appointing a financial planner, one of which is someone that is aligned with your requirements and has a similar ethos. A financial planner can't be an expert across-the-board, although many have niches and a general understanding of other areas. Therefore contacts can be crucial. The first thing to do is sit down and note the type of financial advice you require. You can then start your search on the Internet and begin discussions with like-minded advisors. 

Normally you will find in-depth information and feedback about most financial companies on the Internet. However, many people prefer to consider personal recommendations from friends, acquaintances and family. Ultimately, whatever you require in the future, you must work in tandem with your financial planner in an honest and upfront relationship. This ensures you can maximise the benefits in the short, medium and longer term, planning ahead with confidence.

If you’d like to discuss this article in more detail or to find out more about how our member, Scott Kingsley can support you with your financial goals, please feel free to get in touch - it won’t cost you anything to speak to him, or, alternatively, head over to his website to find out more about the services.