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Hello, my name is Taylor Willingham, and I'm with the Willingham Law Firm. Today, I want to offer you some essential advice on finding a qualified financial planner.
Are You Using a "$10-an-Hour" Financial Advisor?
Consider this: are you entrusting your money to someone paid just $10 an hour? You might think, "Of course not! I’m with a reputable institution like Wells Fargo or Chase." But here’s a reality check: many major financial institutions hire front-office employees at low wages to manage initial interactions. If a large bank is paying its financial front-liners so little to handle your investments, is that really someone you’d want managing your future?
While not every bank operates this way, many do. Often, the individual you meet when you walk into the bank lounge is making minimum wage plus commission, and they may not stay in that role long. A friend of mine, with both a master's degree in personal finance and a law degree, initially worked at a bank for $10 an hour. He soon left for a better job at a more reputable institution. So, when you select your financial advisor, ask yourself this important question: "Am I working with a $10-an-hour employee?"
The REF Framework: Relationship, Education, and Focus
To find the right financial planner, I recommend using what I call the REF Framework:
Relationship: Trust is vital. Do you trust this person enough that if the stock market crashes and they advise you to stay invested, you’d feel confident following their guidance? Trust is earned professionally, not through friendship. Avoid mixing personal relationships—like family or friends—with financial advice. When markets are volatile, blending family with finance can strain relationships.
Education: Does your advisor have the necessary education? It might surprise you to learn how minimal the requirements can be. For example, to sell insurance, you just need to pass the Series 6 or Series 7 exam—basic qualifications that are relatively easy to obtain. When I took the insurance exam in Texas, I studied for just an hour and passed. For financial planners, look for the CFP (Certified Financial Planner) designation, which requires a significant educational background and passing a rigorous exam. Although a CFP is not an absolute must, it’s a strong indicator of knowledge and commitment. If your advisor doesn’t have it, consider their education level, experience, and professional affiliations to gauge their competency.
Focus: Generalists can’t handle every financial need. Some financial planners claim they "focus on everyone," but a quality advisor usually specializes. In law, for instance, general practice attorneys handle simpler cases. Financial planners should be similarly specialized, particularly if they manage significant assets. Advisors who focus on high-net-worth individuals often provide access to alternative investments and have deeper insights into complex strategies, which may not be available to all clients. Be sure to ask if they cater to high-net-worth clients or offer services tailored to unique financial needs.
Additional Advice: Seek Recommendations Wisely
When seeking advice, start with an estate planning attorney you trust, but tread carefully. Some attorneys have referral arrangements with insurance agents or other financial planners, where they may receive kickbacks for steering clients toward certain products. While some of these arrangements are above-board and can even benefit you, ask your attorney to be transparent about any potential incentives.
In Summary: Choose Your Financial Advisor Carefully
Remember the REF Framework: Relationship, Education, and Focus. These elements are crucial when choosing who to trust with your financial future. Take the process seriously, ask the right questions, and ensure you’re entrusting your assets to someone with the expertise and dedication to guide you through market ups and downs.
