Advisor Selection Checklist

14 Point Advisor Selection Checklist

Your choice of financial advisor is important. As emotional beings, we tend to make decisions based upon our feelings. It is important that you have a compatible relationship with your advisor and that you understand their language. To determine compatibility, nothing beats an in-person meeting. Financial Plan offers a free introductory talk.

Your choice should be based upon more than your feelings, however. To assist you in choosing an advisor based upon important factors, we have developed our 14 Point Advisor Selection Checklist. We suggest that you interview potential advisors using this list.

  • 1. Fiduciary

    Financial Plan, Inc. is legally held to the highest standard in the profession, known as the Fiduciary Standard. This means that we are legally required to put the interests of our clients first. Most advisors are not held to the fiduciary standard, meaning that they can put their own profit motive above your best interests.

  • 2. Comprehensive

    Many advisors focus only upon investments. Although the design and management of the investment portfolio is the core of our business, the scope of our advice is broader than that. It includes not only the investment portfolio, but also advice regarding cash reserves, liability management, income tax strategy, education planning, retirement plan design, retirement planning, social security claiming strategy, risk and insurance planning, and estate planning.

  • 3. Sound Philosophy

    Someone once quipped that the important thing about an investment philosophy is to have one. The only philosophy that some firms follow might be called the “flavor of the month” sales strategy.

    It is important to have the discipline to adhere to time-tested principals and a rules-based method. Financial Plan follows a refined philosophy which includes avoiding forecasts, adhering to the efficient markets hypothesis, and tilting toward the dimensions of return, while controlling costs, managing risks, and avoiding behavioral mistakes.

  • 4. Fee-Only

    Most advisors sell investment products on a commission basis. They are more highly compensated to sell some financial products over others. This creates a conflict of interest and destroys objectivity. Financial plan is not compensated through commissions.

  • 5. Independent

    Most advisors represent a brokerage, insurance, or banking firm. This firm is an unnecessary third party that must be compensated. At Financial Plan we are completely independent. Instead of working for a brokerage firm, we hire a brokerage firm to do only those things that we believe are of value: custody of assets, SIPC membership, statement generation, technology platform, and IRS reporting.

  • 6. Experienced

    Good financial advisors are not born; they are made. Guiding clients through major bear markets gives valuable perspective. At Financial Plan we have lived through the Program Trade Crash of 1987, The Technology Crash of 2000, and the Global Financial Crisis of 2008. These experiences have seasoned our judgment. Collectively, our lead advisors have over 65 years of experience. As a result of the long and active pursuit of knowledge through study and the sharing of ideas, our Financial Plan advisors are the gold standard for advice in our market.

  • 7. Clean Record

    Large Registered Investment Advisors such as Financial Plan are regulated and audited by the Securities and Exchange Commission (SEC). See our clean compliance record at www.SEC.gov. Brokers are regulated by the Financial Industry Fegulatory Authority (FINRA). The FINRA site is https://brokercheck.finra.org. A record that includes disclosure events such as multiple complaints and arbitration awards is a red flag.

  • 8. Written Plans

    Your financial plan is too important to be designed in a careless way. Verbal assurances that everything will be fine are not enough. At Financial Plan, we have been writing comprehensive written plans for over 35 years. We have a robust investment and income tax software engine to craft custom plans that illustrate your current situation, our projections for your future, and scenarios to improve your odds of success. These can all be viewed on your own personal website.

  • 9. Team Approach

    We understand that a client requires a variety of different services, not all of which are best accomplished by a lead advisor. Therefore we work in client teams, consisting of the client, a lead advisor, an associate advisor, and an operations director. All four of us together make up a team that creates results superior to what could be accomplished with fewer personnel.

  • 10. Collaborative

    No one can be an expert in every area. Financial Plan has long-standing relationships with professionals who can implement the various parts of your financial plan, including Estate Planning Attorneys, Certified Public Accountants, Property & Casualty Insurance Agents, Lenders, and others. We can work with a client’s existing relationships, or introduce our clients to our preferred professionals who we believe are at the top of their profession.

  • 11. Small Client Base

    Many advisors have upwards of five hundred client relationships. While that might be good for revenue, at Financial Plan we understand that it is not in the best interests of our clients. It is simply too many clients to pay attention to. Therefore at Financial Plan, we maintain a client base of approximately one hundred active client relationships per advisor.

  • 12. CFP® Designation

    The CERTIFIED FINANCIAL PLANNER™ marks are evidence that an advisor has completed a two-year course of study, passed a comprehensive exam, follows a code of ethics, completes ongoing continuing education courses, and is serious about the profession. All Financial Plan lead advisors are required to be CFP® practitioners.

  • 13. NAPFA member

    The National Association of Financial Advisors is an organization of fee-only advisors. NAPFA membership requires extensive continuing education and a strict avoidance of any commission based compensation. Financial Plan is a NAPFA member. NAPFA’s national conferences feature speakers who are known for their mastery of various advanced topics.

  • 14. Investment Access

    Many advisors are “captive agents”, meaning that their employers restrict them to a limited list of investments. Financial Plan does not work for anyone but our clients, nor do we sell a product; so our advice is limited only to what is best for you. In addition to a world of investments, Financial Plan is one of the few advisory firms with access to Dimensional Fund Advisors (DFA), a company that was responsible for much of the groundbreaking research that guides common investment methods today. The implementation of DFA’s exceptional philosophy has benefited our clients greatly.

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