Financial planning basics
By: Connecting Faith
Who can you trust with your finances?
Personal and business relationships are built on the foundation of trust.
Kirby Stoll from the Northwestern Foundation expands on the importance of carefully choosing your financial expert.
“Realizing that if you find someone who has the breadth of experience and the ability to focus on multiple things, not just the investment portfolio, but looking at your whole picture, that would certainly be the better route to go.”
It’s important to understand your needs, in order to find someone who will help to meet them.
“Maybe the financial advisor, who’s a CFP and deals with a smaller portfolio of clients, could very well meet your needs…but maybe it’s that wealth management practice, that has multiple people who are able to address maybe your more complex needs who might be best fit for your experience.”
Finding someone you can trust is extremely important. Paul Stein from Advanced Retirement Resources says that we need to take it a step further and ask ourselves important questions about this person’s character.
• Do they have integrity?
• Do they have competence?
• What are their areas of expertise?
• Do you know how they get paid?
• What are their potential conflicts of interest?
We are encouraged to review these questions and take into account that not everyone has the same work ethic and standards for themselves. Paul elaborates,
“There are really good people that do really good work that work on a commission basis, and there are really good people that work on a fee basis. On both sides though there are people who are not so good, or lack integrity.”
Transparency is also an important quality in a fiduciary relationship. Paul elaborates,
“When you’re paying a fee to somebody then there is required transparency and then they’re held what’s called a fiduciary standard, it’s like they’re the trustee of your trust; their obligation is to make every effort to do what’s in your best interest.”
“The U.S. Department of Labor just pass some laws to hold more advisors, people who give financial advice, up to a fiduciary standard vs. a suitability standard; which might not be the best advice but as long as it suitable, then it’s ok.”
Whether it’s choosing a financial advisor or a wealth management team, and it’s important to choose your representatives wisely. Paul reminds us to review significant questions,
“The most important thing is does the person have integrity? Is the person competent? Then know how they do get paid and ask about conflicts of interest, so you know.”