First of all, let me direct your attention to the CFP Board of Standards, for the best generic summary of what to look for in a financial planner. [click here to read it]
Second. These articles about what you should look for in a financial advisor often leave much to be desired. Almost every one of them is written by someone with a significant conflict of interest. I have one too: I want you to do business with me. Right? I’m obviously going to say you should look for traits I possess so that when you call up to interview me, I’ll check all the boxes. (by the way, if you want to contact me about your financial needs, my direct line is 406-206-7571). For the record, if in any business transaction, someone tries to explain that they are “the one” who is solely looking out for your best interest… run away.

On to the Article…

I don’t want to rewrite the “what to look for” article for the 20,000th time. I have noticed, however, that there are some very important things that are missing from all of these I’ve read as well as a few factual errors that frequently show up as misdirects. I’m going to highlight these here.

Ask them: “Tell me about your finances?”

I believe that every person giving advice should be following their advice. I think Financial Advisors should have their financial lives in order. One of the great things about the investment industry is also to its detriment: the “Financial Advice” Industry was built as one of opportunity for the tenacious (think of the Will Smith movie Pursuit of Happiness). It’s great that people can change their circumstances and many who find success selling investment products actually master their own finances, but many don’t. It’s fine to do business with someone who is great at the stock market, but doesn’t have a clue how to manage expenses. You should know who you’re signing on with and how they do or do not fit your needs.

I could go on into a dozen examples, but I’ll simply note that success in retirement has more to do with how you manage your spending and your risks than it does the amount of money you earn the hot stocks.

You don’t need to get a detailed balance sheet from a prospective advisor. What you need to know is how they are on the right track themselves. If you were to ask me, I would tell you how my wife, Christa, and I learned to balance a budget when we were living on $9.50/hr and avoid the use of short-term debt. I would talk about how we worked to pay down our non-mortgage debt, and how we eventually paid it off. I would talk about how we’re saving for retirement, how we have capital for our present needs, and how we strive to grow in our generosity each year.

We have an articulated plan. We follow it. We talk about it. Whomever you are interviewing to help you be successful in your financial life should be do the same. They may be in an entirely different point in their financial life than I am (for being 30 I’ve learned a lot, sometimes the hard way, but I expect to grow and get better at living for at least another 60 years), but they should be able to talk about their financial story past, present and future.

Do you serve a diverse group of clients?

One of the questions most of these articles suggest is this “describe your typical client.” The reason for the question is because you should know your advisor can handle a situation like yours. I think it’s a good question, but I always hated when it was asked. After a number of years contemplating the question, I realized why. I may or may not have clients with the exact situation you do. You may be one of two clients with the same exact financial details. An advisor could primarily serve retirees who have an median asset value of $750,000. The advisor may have a number of clients with less, and clients with a lot more. If you’re in the $2,500,000+ club, you’re a fraction of a percent of the US population, so odds are, most advisors only have a couple of you.

I think there is a better way to gauge the advisor’s relevance. The one question should really be three.

1. Do you serve a financially diverse group of clientele?
   This is a benchmark for a healthy business. It tells you that the advisor has clients who have the wisdom of old age but may be spending down their assets, clients who are growing into the best clients of “tomorrow,” and clients who are the at their peak right now. It speaks of success and sustainability.
   
   Your situation won’t always be what it is now. An advisor who serves many different situations can help you adapt to varying circumstances and can help you plan more effectively. The obvious example: Can an advisor help you create a retirement plan having never worked with people who are in retirement? How does he or she know what to plan for?
   
   (I also feel there is an ethical component to serving people who aren’t “wealthy,” and it bothers me that people make assumptions about very good advisors who choose to do so. This is a soapbox I’ll avoid…for now).
   
   
2. Do you have experience working with people in situations like mine? Tell me a tale (anonymously of course)?
   You don’t need to be sneaky to ascertain if an advisor has relevant experience. Just ask them. They can give you some specific solutions that they have provided to others to demonstrate their worth. The only issue here is whether they will tell you truthfully, but trustworthiness is a different part of your evaluation (FINRA has a tool for background checks https://brokercheck.finra.org/).
   
   
3. What processes do you have in place to supplement the deficiencies in your experience?
   Every advisor has gaps in knowledge and experience. We also all have gaps in our licensure. A good advisor is used to working closely with other professionals and takes supplementary education very seriously in order to meet all of your needs.

How are you living in a way that recognizes the world is bigger than yourself?

Because generosity is an important financial discipline, your financial planner should have eyes for something other than his/her pocketbook. I know many advisors that are wonderful people who are working hard to make their communities better, to bless their neighbors, and make a difference around the globe. I can write out a long list of advisors who are doing things like foster care, global relief work, volunteering with at risk youth, helping people with disabilities, and more. In my travels I’ve talked to hundreds of other advisors with different perspectives and lifestyles when it comes to service, but I can say that I have yet to meet one who is passionate about serving and giving to others that has given me a reason to question their professional character or the quality of their advice.

The “fee-only” Myth

This one is flagrant. Fee-only is different… not better.

It seems like it’s plastered on every blog, “make sure your work with an advisor who is only compensated on a fee basis because commissions make advisors do too much trading and buy the investments that pay them bigger commissions,”. It’s asinine and a bold-faced lie told by a growing number of people in the financial industry. Asset-based fees and commissions are different, but none is universally superior. If an advisor doesn’t grasp this, they simply lack experience and are buying into a widely circulated misconception. (sorry to my fee-only friends, my intent is not to insult.)

The truth is, the best interest of a client is best served by the most cost-effective solution balanced with the most ideal result. Sometimes this is best accomplished on a fee basis, but it is sometimes most effective to charge a commission. (Please note that I am presently a fee-only advisor. I just don’t like dishonesty in marketing.) As a fee-only advisor, I have conflicts of interest too, even if I’m a charging the same fee across all products. Those things don’t force me to do what’s in your best interest, it just changes the way our relationship looks.

Sure, I’ve seen a lot of circumstances in which someone came to me after another advisor had charged them a commission for an unsuitable product or engaged in what were perhaps abuses of the commission-based system. But what about the advisor that charges a recurring fee that produces a high profit margin and does nothing for the client? There are a lot of responses someone might toss back at me, for example, most fee-only advisors are only “Investment Advisors” under the Investment Advisors Act of 1940 (or their representatives) and are thereby fiduciaries. First off, Fiduciary status isn’t the result of fee structure. There are commission-based advisors who are fiduciaries. Second, “Fiduciary” is usually a legal term, and it’s always a technical one, and it doesn’t always mean the same thing. When you hear the term Fiduciary, you need to know what kind of fiduciary, and what standards they need to follow. There are ERISA (retirement plan) Fiduciaries, Fiduciaries under the Investment Advisors Act, and fiduciary standards for various credentials like the CFP^®. The short answer is this: everyone in business has a conflict, and no fee structure can eliminate that.

Sorry about the rant. Here’s the question you should ask:
“how do you evaluate your recommendations and compensation that minimizes your conflicts of interest and is fair for the products/services you are providing?” If they dazzle you with a bunch of technical information to avoid the question, give you a non-answer such as “that’s just the price for access to the markets,” then ask the question again. As financial professionals we should all have a satisfactory response to this question.

The most important part of choosing a Financial Advisor is finding someone you trust, who has the ability to help you with your financial needs for the long term. If you have questions about the process of finding the right advisor for you, reach out to Co|Create for help.

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One of our core philosophies is somewhat unorthodox, but it makes sense.

Money has no value on its own.  It’s paper, with some special ink, and cotton.  In today’s financial world, it might only be a number on a hard drive somewhere recording your account balance.  If I have two pieces of paper, one being a one-hundred-dollar bill, and the other a blank sheet of paper upon which I hand-scrawled “$100,” the former has value and the other does not. What makes the difference between two materially similar items so dramatically different?

Some people would say its faith in the currency system, but it’s actually much more than that.  Money is exactly as valuable as what it is used to accomplish.  We might say that a bank account with $5000, has a nominal value, but $5000 that is used for something—to buy a boat, pay for a grandchild’s college, or drill a well in Africa, has functional value.  Financial planning is the practice of connecting the functional value of your assets with their nominal value and then maximizing both.

As a result, one of the first steps in creating your financial plan is to identify the “functions” that are significant to you.  These break down into two categories: quality of life and world impact.  The quality of life are the self-oriented needs and desires you have.  These are the basic questions that every financial planner would learn to ask in business school.  “What are your basic monthly expenses?”  “Do you plan to travel?” “Do you foresee any major expenses like starting a business or remodeling your home?”  I call these self-oriented, but they are not selfish or un-important.  These are the reasons most people have built up their assets, and a good financial plan will help you accomplish these and it will integrate them with your world impact.

The term “world impact,” isn’t necessarily as extreme as it sounds.  People are fundamentally human, and we exist in the context of community.  We cannot escape it, and we aren’t fully complete as people unless we participate in it.  Our community is made up of our families, our neighborhoods, our towns, states, our country, and the global community.  World impact, means impacting one or more of these areas.  Each of us has a world impact, whether or not we choose it.  When talking about your impact, it’s important to note that it is yours.  Some of the things people do with their impact: help a grandchild pay for college, volunteer as a big brother or sister, sponsor a child with Compassion International, provide clean water to a remote village, start a business, teach a young person a trade, spend time with you kid so they know they are loved.  These are all parts of significant world impact, and we all have unique parts to play.

Our financial plan either helps us accomplish these things, or hinders our ability to engage the world around us.  A good financial planner will help reconcile the two so you are better equipped to live the life you were meant to live and will help you recognize the functional value of your assets.  If the plan focuses on just one, then you’ll end up either living a lonely, lavish life, or playing catch-up because you weren’t prepared to fund your basic needs.

The Co|Create way is to create a future in which you can make the most of your quality of life and your world impact…together.

It can be hard to figure out the best investment options for your retirement plan. In many cases the target date funds, the general default for most 401(k) plans, are less than ideal. If you have a workplace retirement plan, whether it’s a 401(k), a 403(b), or some other type of plan, a Co|Create advisor will gladly help you determine the best allocation using the same evidence-based, data driven processes we use for the investments managed in-house. 401(k) consultation is billed at a flat fee of $100 for the first plan and $75 for each additional plan. It is important that you evaluate your portfolio’s allocation at least annually. If we manage your other assets, this service is included at no cost.

As a business owner, it’s hard to carve out time to work on your personal financial plan, and to-do list items like setting up employee benefits and creating ways to make an effective succession plan remain on the back burner until they are either imminent or it’s too late. 

Some of the services we provide to businesses and their owners are:

• Employee retirement plans.  These include the common 401(k) and SIMPLE IRA, to more complex plans.  We’ll help you look at your business needs and identify how you can best leverage a retirement plan for employee retention, tax savings, or even to help encourage employees to retire sooner.
• Strategies to retain and reward key employees.  You may have one or two people your business depends on.  There are a number of ways to make sure you keep their loyalty.  These plans, are complex, customized, and require expertise in design and in the way you fund them.  We’ll help you identify your need, establish, and fund the plan.
• Identifying and reducing business risks through diversification
• Strategies for selling your business (sooner or later).  The most valuable asset most business owners possess is their business itself.  Selling your business, is something to plan for years in advance so that you can make sure it transfers efficiently to the ideal person and also so that its value is optimal.  People who plan ahead tend to win at this.  If you own a business, make a plan to create value whether you sell next year or in 30.

Your ability to live the life you want rests squarely on your shoulders. This is true in the present and in the future. Understanding this is key to leading a successful life, financially and otherwise. The short-form of a financial plan for someone who is in what we call the Accumulation Stage of life, is “save as much as you can as early as you can.” Given the power of compounding, it makes sense for a long term plan. There are, of course, many factors that complicate the simplicity of saving this way. It also doesn’t make sense to save rapidly without a plan, because you could end up sacrificing the life you want to live now for resources you may not entirely need later on. CoCreate strategies seek balance, so you can pursue your passion now and in the future. CoCreate strategies for savers include a broad scope of consultation, coaching, and management activities. Some of the most common are: 

•Helping you determine what you are saving for.
•Helping you determine your capacity to save for your future, and discovering ways to increase your savings.
•Helping you to identify ways you can maximize your resources to live in the present.
•Creating a plan to continually measure your progress in attaining your goals.
•Managing investments for retirement AND pre-retirement goals.
•Helping you evaluate real estate and business investment opportunities.

Retirement means something slightly different to everyone. Traditionally, it means wrapping up your career and enjoying “the golden years”—riding off into the sunset. More and more, people have a new definition of retirement. They want to find fulfillment in a second career, or explore the world (whether by RV, plane, or fishing boat). Others want to give their time to their communities and their grand-children. You could be one of these types or a blend of all of them. In any case, you are unique in your purpose and desires. 

One thing each definition of retirement has in common is what we call Financial Freedom. You’re no longer a slave to your career for the sake of paying the bills. It means you have significant choice in what you do because you have arrived at a place, financially, that can sustain you in a variety of different options. Our job is to facilitate this financial freedom. Some of the services we provide to accomplish this are

•Cashflow Management – from Social Security benefits, to investment income, to rental proceeds.
•Asset Management – managing your investment assets to generate the income you need as safely as possible, so you can focus on living.
•Risk Management – this obviously includes managing investment risks, but goes further to helping you consider other risks you face, like over/under spending.
•Goal Prioritization – It’s easy to spend your resources on the unimportant thing immediately in front of you instead of what you really care about. We’ll regularly review your financial priorities to help you keep them in focus.
•Tools for the Next Generation – You’ve stewarded your resources to this point, and you’ll need to be asking the question about who the next steward will be. The most overlooked component in estate planning is preparing them for the task. Our job is to equip you to do so and provide whatever assistance you need along the way.