How to Find a Financial Planner You Can Trust

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Looking to take your finances to the next level? Learn how you can find a find a financial planner you can trust! 

Why You Need a Financial Advisor You Can Trust

The first financial advisor I spoke with was through my job. He was someone my boss had worked with a few things and he offered a free meeting with the office staff to sit down and talk about money.

I was working part-time and going to college so my money was pretty tight, but I wanted to get some ideas on how I could improve things.

The meeting was good, I learned a bit about investing and why it was important to diversify. He was particularly focused on started with mutual funds, particularly the ones his firm offered. I politely declined and he understood.

Fast forward a few years. My husband and I are doing pretty well  – paying debts, saving every month, contributing towards retirement – but we wanted a professional to look things over.

We knew the foundational stuff, but we were curious if someone could give us some heads up on any opportunities we were missing out on. We also wanted to get a ballpark idea of how feasible our early retirement plans were.

We set up our appointment and were grilled on our basic goals and numbers. About two weeks the adviser met with us to go over our plan.

To be honest, we were a bit disappointed. We were hoping for a customized plan, but it came across as a cookie cutter report.

How to Find the Right Financial Adviser

Finding a great financial planner – someone who can not only run the numbers but also work with you on your goals and lives can be tricky.

I want to fix that.

Michael Kay joined me for a chat. He is a fee-only financial planner at Financial Life Focus.

We sat down the other week and discussed:

• key terms to understand your adviser's standard of care
• questions you need to ask any adviser before hiring them
• how a good adviser crafts a financial plan from your goals

You can watch the whole interview below or read an edited version of the highlights here.

Hope you enjoy!

Not All Financial Advisers are Equal

Elle: Good morning. Thank you so much, Michael, for coming on and chatting with me.

Michael Kay: It's my pleasure. It's great to be here.

Elle: I'm really excited because this is something I think that is very important. I try to encourage and educate couples that they can work together with their finances.

But there comes a point with everyone's finances where they need a professional and that would be someone you. How many years have you been working in the financial planning industry?

Michael Kay: It's been over 30 years.  And it's kind of evolved from the very basic you know working in financial services that involve selling products and insurance and investments and planning and commissions and has now migrated to where we were a fee only.

Now we sell no products and we charge a fee for what we do and it's a much more comfortable place to reside.

Elle: That is fantastic. I think you on hit something –  there are so many people that claim to be a financial expert. And you mentioned this word fiduciary.

So I want to start off with that – What makes being a fiduciary so advantageous?

Michael Kay: Well, let me just pull back half a step.  The idea that everyone when people talk about financial advisers in the sense that the word is so general that it encompasses everyone from someone who sells insurance to the stockbroker at Merrill or UBS or whatever and right on through the fiduciary world which is a different standard.

Those of us in the fiduciary role have a legal and ethical obligation to act in our clients best interest.  We must disclose all conflicts of interest and how we get paid and all these other things.

If there are legal entanglements or if there have been complaints all these things have to be upfront in our disclosure that's updated every year.

So the fiduciary world really allows clients to work with a planner who really has to work in their best interests without regard to their own interest.

Of course, we want to do business to make a profit. But again, our advice has to be based on what is in our clients best interest. 

It's our guiding principle and it's very comforting to know we can give advice without regard to it's going to impact our income one way or the other.

Questions to Ask Your Adviser

Elle: I think this is absolutely crucial. Many couples work hard for their money and so having a fiduciary can give some peace of mind.

As a financial adviser – and I've talked to some others and I  want to hone in on this – do you feel offended if someone asks you if you are a fiduciary?

Michael Kay: I want them to understand. Information is power.  You want to understand who you're working with.

That's not to say that if you were an adviser or works on the product side is bad or they are dishonest. I'm not inferring that in the least. They might be super well-skilled they might be really great at what they do but you know their standard of care is different.

As long as the consumer understands that the standard of care is different. In that case, it's what's called suitability.

Under suitability, the investment that the financial planner is providing is suitable for the client based on where they are versus what's in their best interest.

So there's there is a wide gap between those two and I think you know it's vital for clients for consumers to ask anyone they're working with.

• How do they get paid?
• Are there conflicts of interest?
• Have there been complaints against them?

You want to know.

It's really important you're trying to build a relationship of trust and in order to do that you need to know and you need to be comfortable enough to say hey this works for me or this doesn't work for me.

Financial Life Planners

Elle: Some good advice. And you mentioned something that I've loved – a standard of care.  It reminds me of like going through a decision and trying to find the right physician.

Every doctor has specialties in skills and even within the same specialty they have different approaches.  I heard you are this expert on goal-based financial planning.

How would you describe gold based financial planning and what's perhaps typically done?

Michael Kay: I'll kind of refine the statement a little bit and rather than call it goal based we consider financial life planners.

So financial life planning really focuses in on someone's life how they live their life what they value most.

What are the things that will allow them to put their heads on the pillow at night?

If we see the road ahead we understand where we're going and how we're getting there, then it's comforting.

So financial life planning really geared towards that understanding of the client's values and beliefs around money versus the typical financial planner who will say ‘Show me what you make. Tell me what you spend and what your net worth.'

In financial life planning, what we look at is:

• where are you today
• how satisfied are you with the various aspects of your life (not just financial)

We look at the rest of your life  – your family life, your relationship with your community, your leisure time, your health and things like that.

Your money history really informs us because we learn about money growing up. We learn our messages about money when we're young and we watch our parents.

So we want to understand what informs their thinking today. Are you a worrier or an avoider around money?

What we find with couples, especially couples who have varied money histories, is that they're not speaking the same language.

And it's understandable.

So what we want to do is bring them to a place where ‘hey this is your normal OK' and ‘this is your normal.' Neither one is wrong.

I think are the experiences you had so let's kind of understand it embrace it and understand it from each other's perspective.

I've had so many experiences where one spouse would look at the other after we go through some exercises especially around their money history that they've been married for 20 30 years and they didn't have any understanding because it's not it's typically not a conversation.

Elle: In addition to being a financial adviser you're almost like that neutral third party/marriage counselor!

Michael Kay: In a certain sense I guess you could say. I'm really careful of the word therapist because it is not therapy.

What we try to do is ask really good questions and listen to what's being said and provide an atmosphere where people can share without judgment.

One of the biggest blocks that people have and couples especially is there is this feeling of dread and blame and shame around money.

Here's an example – If my furnace breaks down I am not getting a wrench. I'm grabbing the phone and I'm calling the guy who knows what to do with my furnace.

Same if you have some kind of illness. I'm not going to self-diagnosis and treat myself.

When it comes to money, though, we have as a society this idea of shame with not knowing, especially men.

That's OK. It's not your fault. And what we really want to do is take that whole thing away from what you should know.

You shouldn't know unless this is what you do every day. Why would you know.?Why would I know how to fix my furnace unless it's what I do?

Thoughts on Finding the Right Financial Adviser

I'd love to hear from you – how many financial advisers and planner did you see before you found the right one?

How have they helped you with your goals?

This post was originally published in November 2017. It has been updated in June 2019.