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How To Find A Good Financial Adviser - Questions To Ask A Financial Planner Before Hiring - YouTube
Channel: Prana Wealth
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Are you trying to figure out how to find
a good financial advisor? I've got the
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answers and the resources for you coming
up.
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Hey there folks! Patrick King here,
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financial planner and host of
Transformative Television. Here on this
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channel, we help people who are going
through a divorce,
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people who are dealing with the loss of
a spouse or a loved one, or people who
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are just plain trying to transform their
lives in a positive way. If that's you,
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please consider subscribing. And if you
need financial planning help going
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through any of these transitions, please
give me a call. Here today in this
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episode, what I want to do is share with you,
how the heck do you find a good
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financial planner? Obviously this is
something very near and dear to my heart
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and if you look down on the links, you
can click through and download all of my
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tips here, all of my questions to ask a
potential financial planner. Download
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that and use that in your search.
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All right! So, how
the heck do you find a good financial
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adviser? So if you're looking for
somebody that knows what they're doing
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and will put your interests ahead of
their own, there are a few resources that
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I recommend.
The first one is NAPFA, the National
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Association of Personal Financial
Advisors, of which I am a member. So NAPFA
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is the community of fee-only, fiduciary
financial advisors across America. You
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can go there, search your area and you'll
find someone who is a fiduciary. So, what
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does that mean? That means that they are
legally required to put your interests
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ahead of their own. Why is that important?
Well, hey, turns out the majority of
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financial advisors are really brokers in
disguise and they're just required to
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give you what's "suitable". I
would much rather have what's in my best
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interests than something that's just okay
or not inappropriate, in other words. So
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obviously it's something I very much
believe in. I believe that is THE
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way to take care of clients if you're a
financial adviser.
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Another resource that I recommend is the
Certified Financial Planner Board of
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Standards - the CFP Board. The CFP庐 is a
designation that most real financial
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planners have. It's a legit deal. It's not
just something that you can buy and
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stick on the end of your name.
It comes with a grueling test and an
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education and experience requirement. So
if you're working with a CFP庐
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professional, you know you're working
with someone who's a dedicated financial
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planning professional. You can go there,
you can search for your ZIP code, also
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find a well-regarded professional
financial advisor there.
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Another organization I want to encourage
you to check out is the XY Planning
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Network. Now, this is a group of fee-only,
fiduciary financial advisors designed to
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work with Gen X and Gen Y clients by
offering different types of fee
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schedules. So the old-school way of doing
things was to charge a percentage of the
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assets that the advisor managed. But most
of those type of firms have high minimum
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investment amounts and not everyone has
a million bucks, say, to get started with
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an advisor. But you still need that
advice.
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So the XY Planning Network advisors
typically have either hourly, flat fee or
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retainer based fee structures so they
can work with folks like you. So check
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them out.
It might be a little bit better of a fit.
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Full disclosure, I'm a member of the XY
Planning Network.
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All right. So one last thing, as you're
looking, that I want to encourage you to
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watch out for in this case is
word-of-mouth recommendations. I would be
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very careful with them. It turns out that
most of the financial advisors out there
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are really brokers in disguise. So if
you're talking with a buddy and they say, "Hey,
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my guy will hook you up," be careful with
that because you don't know how their
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guy is really operating. Which leads
me to my next point: once you've found
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some potential financial planners,
financial advisors, check them out! You
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can do a background check
thanks to FINRA's BrokerCheck website.
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I'll post the link in the notes below. If
they've got any kind of censures or any
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kind of issues in their background, it
will show up there and you will know
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right away. You can cross that person off
your list. So check them out on BrokerCheck.
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Okay, you found a list of potential
financial advisors. You've done a
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background check using FINRA's BrokerCheck
website. How the heck do you find
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out if these are good folks? Well of
course, call and get a consultation.
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Getting a consultation with a financial
advisor may be the least difficult thing
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that you do today. But once you get that
face-to-face meeting set, ask them a few
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questions to make sure that they're
legit. So because I'm a financial
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advisor, I want to defer and say that
some of these questions come from the
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Intelligent Investor column from August
2017 in the Wall Street Journal. Link in the
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show notes - check it out. But having done
this for a long time and seeing it done
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the right way and the wrong way, here are
some of those questions that I think are
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important for you to ask when you're
interviewing a financial adviser.
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Okay, so question number one in
interviewing a financial adviser, in my
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opinion the most important one: do you
always act as a fiduciary in dealing
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with your clients? And if so, will you put
as much in writing? Again a fiduciary is
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someone who's legally required to put your
interests ahead of their own. And if
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you're dealing with somebody that's not
willing to do that, well I can't help you.
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If they're not a fiduciary, cross them
off the list and move on to the next
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person.
All right, so question two: do you receive
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any kind of referral fees or any kind of
income from someone other than your
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clients? Because if your advisor is
getting paid by someone other than you,
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that's a potential conflict of interest
there and you want to know what those
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are. So that's question two.
Alright, so question three: do you
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participate in any kind of sales program -
like rewards program? Do you have any
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kind of quarterly or annual sales
required targets? Your life savings
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shouldn't be someone's quarterly sales
goal. All right next question, please
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disclose your conflicts of interests.
Okay! Sounds pretty obvious, right? But
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there's always a conflict of interest,
even with fee-only, fiduciary advisors.
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There's a potential conflict of interest
if, say, they manage your assets. Well,
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their fee is based on assets. They have
an interest in you keeping more assets
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invested with them rather than, say,
paying off your mortgage. So that's a
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potential conflict of interest and
everyone has them. What you're looking
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for is an advisor that knows what they
are and has minimized those.
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Next question to ask a potential adviser: what
are your credentials? The credentials
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that you're looking for are the CFP庐
CERTIFIED FINANCIAL PLANNER mark, the CFA庐
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designation, Chartered Financial Analyst,
and a CPA even, a certified public
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accountant. Those are the three credentials that I would look for in someone
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that was managing my money.
CPAs, they know taxes, but some are better at
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the investment side than others.
So I would lean towards the CFP庐 and CFA庐
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designations. But all three are legit. All
three are people who are - who have passed
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rigorous examinations that require study
and experience for minimum requirements.
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So you can rest assured, that those
people know what they're doing.
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All right, my last question that I feel is really
important to ask a potential financial adviser:
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who manages your money and how
is it invested? Now, what you're looking
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for here is that, "Hey I manage my
money and I invest it the exact same way
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that I invest my clients' money." You know
for me, it's different levels of risk, so
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I have different proportions, but it's
the same investments across all my
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clients portfolios that I have in my
portfolio. I'm not going to do anything
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differently for me than I think that's in my clients best interests,
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right? So I have my philosophy, I stick to
it. And then I'm not doing one of those,
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"Hey we got pool, we got a pond. Pond's good
for you," kind of deal, right? Do you want
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to deal with that person? Absolutely not!
You want someone that's eating their own
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cooking. So that's my final question that
I think is extremely important to ask your advisor.
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Folks, thank you so much for watching this video. I hope
you got something out of it. Click the link
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below and download this checklist with
all these questions as you're
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interviewing financial planners. If you
like this video, click "like" and consider
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subscribing if you want more of these
types of videos. Leave a comment below.
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Tell me what you're looking for, what you
liked what you didn't like. Until next
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time, I'm Patrick King. This is
Transformative Television. And take a
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deep breath. You got this!
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