Key Takeaways

  • If you choose to work with a financial professional, research your choices and interview each person to find the right fit.

  • Be sure to come prepared and be careful not to provide misleading information.

  • A financial professional can help guide you in achieving your life goals, provide value when things do not go exactly as planned, and can serve as a trusted adviser.

Yes, you can do your own financial planning. No, you do not need to work with a financial professional. However, if, in your journey to financial freedom and success, you get stuck or perhaps would like some additional help, you may find value in connecting with a financial professional. Should you choose to head in this direction, you will want to know how to make a wise choice of financial professionals.

It’s a very good idea to research a small handful of individuals with whom you think you want to work and then schedule a time to interview each one. During each interview, you are primarily seeking to determine the financial professional’s skill set, education, and other background. Of course, you want to know whether the individual is licensed and/or certified, and you will want to check his or her current status, and whether there have been any disciplinary actions, with his or her professional organization.

You want to learn about how they approach financial planning—their process and philosophy. You also want to learn how they are paid, whether it’s commissions, fees—with or without a retainer, as a percentage of assets under management, hourly, by project, or other variations—or some combination or other variety of options.

After you determine the financial professional is certified, competent, and has a clean disciplinary record, you have one more task at this stage. The biggest, most important, question is whether you feel comfortable working with this person. If yes, you may well have found your professional. If not, keep looking. A financial advice engagement requires trust and a reasonably high level of relational comfort. It’s very important for you to be satisfied before you enter into such an engagement.

How to Prepare

Your situation will be a bit different from others, but there are certain preparations that should help facilitate the financial engagement. We have mentioned that a financial professional will work hard to coordinate your financial plan in such a way that the various components work together. This will likely mean you should be prepared to share some specific information, that may include:

  • Personal information such as your age, marital/relationship status, dependents (children, parents, others), place of employment, your general health (especially if you have health issues that may create increased expenses)
  • income/expense-related information, such as current and projected income, several years of income tax returns, anticipated career changes, current and projected expenses, assets/ liabilities, income and expenditures (be ready to share your budget, statement of financial position, and cash flow statement if you have them)
  • Portfolio information: insurance, investments, retirement, savings, risk profile, etc.
  • Any unique information that you believe has the potential to impact your financial plan

Most importantly, you should be prepared to share your life goals and dreams. This is perhaps the most important area of preparation, because it will serve as a sign post for the path you and the financial advisor will travel.

What Not To Do

We have looked at lots of things in the “what to do” category. Here are some things that you probably should not do.

First, do not extend your trust too easily. There are, unfortunately, individuals and firms in the financial services universe who should not be trusted. Doing research, as described above, will go a long way toward protecting yourself. It’s not a bad idea to ask around, and check with people who have worked with an individual, to learn about their experience.

At the same time, do not withhold your trust without reason. Many individuals and firms work hard to be worthy of trust. Ultimately, the client and financial professional must establish a relationship built on mutual trust. There is no other way for the two to effectively work together. So, while you should protect yourself from being harmed, you should also extend trust where it is warranted.

With the preceding understood, here are some additional things it’s probably best not to do prior to engaging a financial professional. Don’t:

  • Come unprepared and without an idea of what you want to accomplish (especially in the area of your life goals).
  • Refuse to provide reasonably requested documents and information.
  • Bring all your statements in a bag for the professional’s team to sort.
  • Provide misleading information.
  • Make it seem like you have a greater risk tolerance than you do. Let the financial advisor know how you really feel, and he or she will be better able to serve you.
  • Assume the financial professional will be able to arrive at the one perfect solution . . . especially without your help and input.

Neither the “to do” information nor the “not to do” list is comprehensive, but each should provide guidance to help as you work with a financial professional. Even when working with such a guide, you will still have quite a bit you will need to contribute to the process. The value of the financial professional is that he or she can help guide you in the process and facilitate your progress in achieving your life goals. They can also provide value when things do not go exactly as planned, and require adjustments. Finally, they can serve as a good source of information and as a trusted adviser.

You do not need to work with a financial professional to be successful, but if you choose to do so, and engage the right individual for you, you may find that the path to achieving your life goals will be much cleaner and more straightforward. You may well find yourself being even more successful than if you try to do everything on your own.