First, there is a difference between Financial Planning, Investment Advice and Retirement Planning.
Financial Planning is taking you from where you are to where you want to go. Investment advice is structuring your resources towards that goal … and many confuse the investments with the goal. Without a goal, what would be a proper investment? Without a goal, it is investing for investment sake … and the goal morphs or becomes “to make money.”
However, the real goal is managing wealth in such a way that the goal is not only achieved, but sustainable. And that’s my segue to Retirement Planning. The goal isn’t to just retire, or the beginning. The goal is sustainable retirement throughout retirement … to make it to the other end!
Businesses plan all the time. The problem is that people don’t … but they should. Otherwise they end up with random results and wonder what happened and why.
Secondly, what kind of control are you giving to the person you choose to work with? You may choose an adviser who has discretionary control over your assets. In other words, you have given authority for the adviser to decide when and how to invest your money and make changes (based on written guidelines). Alternatively, you may choose an adviser who has no discretionary authority over your assets. They advise and you decide. In reality, the adviser with no authority is closer to being a true adviser while the adviser with authority is closer to being a money manager. In general, but not always, the non-discretionary adviser has a broader perspective on your goals because the emphasis is placed on goals and the plan and not just investing.
Note: how you pay the adviser in any of the cases may be exactly the same … so compensation is not how you distinguish one adviser from another … other than separating out commission advisers from fee-based (fees and commissions) or fee-only (no commissions at all). In general, you are more likely to find an adviser who is “in your corner” (advises in your interest) with a non-discreationary adviser who is also fee-only, and least likely to find one in your corner who is paid by commissions.
Therefore, when you are interviewing someone to help you … keep the two differences above in mind: 1) What kind of planning are you trying to do, and 2) What kind of control are you willing to give up? Services they give would fall into any of the planning categories above. Product is where you may get steered based on “just investing” focuses. Most of the conversation should be on the planning topics for you and less on investment advice (which supports the plan … not becomes the plan).
There are helpful resources available at the SEC’s Investor website. The SEC’s Investor Alerts website is also helpful so you may separate what is legit from fraud.
When you are interviewing someone to help you … here are helpful questions to ask them:
SEC Top Tips for Selecting a Professional
National Association of Personal Financial Advisors (NAPFA) Tough Questions to Ask Your Advisor.
And … as you ask these questions … keep in mind what it is you are trying to do … often it is not a product … rather a service and process as the foundation where the product, if any, is almost an afterthought.
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