Should I Hire a Financial Planner?

I’m not rich. I’m not even close to retirement. I’d love to start planning for the future, but I don’t know where to start. Should I hire a financial planner?

The truth is, everyone could benefit from a financial planner, as a financial planner can help with budgeting, retirement planning, which should start during your working years, and even estate planning for young parents. There are many reasons why you could benefit from a financial advisor at any stage in life.

Most of the investors who use Paladin Registry’s free services fall into one of three categories:

  1. They are replacing their current, bad financial planners
  2. They are first-time users
  3. They are do-it-yourselfers who are transferring assets to professional planners

Replacing a Financial Planner

Sadly, millions of investors have to replace their financial planners every year.

Sometimes, this is because the investor didn’t do their proper research the first time around and therefore, didn’t know the right questions to ask or values to look for. Or they may have made a decision to hire a financial planner simply off of a recommendation or a well-known firm name. Both of these decision-making tactics are very dangerous!

Other times, it’s because the “planner” was simply a good salesperson and may have recommended products that weren’t really in the client’s best interest.

In 2016, the Financial Industry Regulatory Authority (FINRA) reported 1,434 disciplinary actions that resulted in the suspension or banning of more than 1,200 financial advisors from the industry – temporarily or permanently. And this is the tip of a very big iceberg. There are millions of other investors who received bad advice but chose not to file complaints. They just fired the advisors who had done them wrong and selected a new advisor.

These return investors typically use Paladin Registry’s free match service to find a replacement advisor, so they do not make the same mistakes twice. Paladin Registry is the only SEC-registered service that validates and documents advisor qualifications and business practices for individual investors. And all of the advisors we match to investors are financial fiduciaries, meaning they are legally required to put their clients’ best interests first. We have nothing to sell. We just want to help investors make the right decision the first time, because mistakes can be expensive – sometimes detrimental. Financial planners can also be searched by name or by zip code.

First-Time Users

Fortunately, Paladin also sees many first-time users who visit the Paladin Registry website to educate themselves. They have never used the services of a financial planner before and often times, the jargon used among planners can be confusing.

If you fall into this category, you should be commended! Hiring a financial planner is one of the most important decisions you will make, because he or she can determine when you’re able to retire, what that retirement will look like and what you can leave behind, if anything. Knowledge is key in this process. Educating yourself ahead of time limits the odds of making a mistake and therefore having to terminate a planner and start the process over.

Paladin offers several resources, from complimentary eBooks to our new financial dictionary, which allows you to search terms you may have come across during your research.

As mentioned, there are many reasons why someone may decide to hire a financial planner:

  • They inherited a great deal of assets
  • They are rolling a 401k into an IRA
  • They need planning and investment services
  • They are concerned about their financial security during retirement
  • They want to start saving for college or start their estate planning

Do-It-Yourselfers

Paladin Registry also helps a lot of do-it-yourselfers who no longer want to plan their financial futures or invest assets on their own. They no longer have time to do the work themselves or they’re at a point where they now have more assets than they are comfortable investing on their own. Many do-it-yourselfers need specialized financial advice because their performance is lagging or they aren’t sure how to minimize their risk in volatile markets.

Research, Research, Research

Regardless of why you’re looking for a financial planner, proper research is crucial.

There are many salespeople who pose as financial planners to benefit themselves.

You may think you’d simply be able to spot a fake, but this is harder than you might think. The wool was pulled over the heads of thousands of poor investors who believed Bernie Madoff was a good financial planner. And unfortunately, many of these people lost millions of dollars.

Salespeople often use deceptive tactics, like omission, to make an investor think they are an expert when in fact, they are not. For example, a “planner” may not tell you how he or she is paid (by commission; a certain product will make them more money). In this situation, if you don’t ask, you may never know.

Others simply try to win you over with their personalities, but a good personality doesn’t mean a person will be good with your finances. In fact, some of the best financial planners are more analytical than social. They are numbers-people and are often more introvert. A friendly, outgoing personality could just be what makes someone a good salesperson.

Other tactics that salespeople commonly use include:

  • Misrepresenting key information about their competence and ethics
  • Using sales pitches to create unrealistic performance expectations
  • Selling proprietary products without proper disclosure
  • Using fake credentials (certifications, designations)

Read this recent blog post for other major red flags to be aware of.

There is no one-size-fits-all solution. Investors have different needs (estate planning, tax advice, retirement planning), different wants (a virtual meeting space, a local office) and different goals (travel, time with grandkids, specific estate plans). It’s important to find the best financial planner for your specific situation. If you find yourself asking, “Should I hire a financial planner?” we encourage you to take advantage of our investor tools.

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