Aspera Financial Planning
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Financial planning can be a confusing term. It really just means "advice about financial issues." It could be as simple as seeking advice on a single topic, like how best to allocate your savings or whether or not to invest in your brother-in-law's new day trading venture (no, you shouldn't). It could also entail a detailed review of your finances, setting financial goals, and putting a plan together to help achieve them.
There are plenty of sources for financial advice: investment advisers, financial planners, financial consultants, your cousin down at the pawn shop, websites, astrologists, fortune cookies, etc. Take the time to understand the different types of advisers, the services they offer, their work and educational background, and how they charge. Weekly takeout Chinese with a new fortune cookie is a lot better than bad financial advice.
What You Should Know
Do I need a financial adviser?
Need is a pretty strong word. Could you benefit from a financial adviser? Sure you could. Who wouldn't benefit from someone knowledgable about finance? My career has been spent in the investment and finance world, yet I still bounce ideas off of trusted sources. Even if you have a great handle on your finances and have most things pretty well figured out, there's definitely some benefit in a skilled second opinion.
Do I need comprehensive financial planning?
First off, comprehensive financial planning involves looking at your entire financial picture and helping to figure out what's working, what's missing, and what might need some tweaking. It helps ensure that all of the financial pieces of your life are working together.
What kind of financial planning expert should I hire?
It depends. If you're looking to better understand your emotional attachment to money and what impact your childhood had on current spending patterns and your ability to reach your goals, you might want to seek out a holistic financial planner for a group hug and some analysis.
What's up with all those abbreviations and designations?
You're unlikely to run across an adviser who doesn't have a bunch of letters after their name. As with any field, we all want the world to know that we're skilled and legitimate. You'll run across CFA, CFP, CPA, ChFC, CIC, FRM, CLU, CAIA... Actually, if you really want to get confused, go to this FINRA link for a list of over 200 designations. 200!
How is a financial planner paid?
There are a variety of ways financial planners charge for their services. They may quote you a flat fee once you've agreed on the scope of work to be done. If they're going to be managing your investment accounts, they may charge you a percent of assets each year. They may charge an hourly rate. Some planners make money by selling investment or insurance products to you. Make sure you're perfectly clear on how and what your adviser is charging.
I keep seeing "fee-only." What does that mean?
Fee-only means that the adviser's only compensation comes directly from you, the client. They do not receive commissions or referral fees from selling products to you, such as insurance, annuities, or investment funds. The intent is to keep the relationship and compensation as transparent as possible and to minimize the potential for conflicts of interest.
What questions should I ask when interviewing an adviser?
- What is your finance and investment experience?
Tell me about your credentials and educational background?
What services do you offer?
Are you a fiduciary?
Are you fee-only?
Do you receive commissions or referral fees?
What does your ideal client look like?
Tell me about your investment philosophy?
What does your process look like?
How often will we meet?
What information do I need to provide?
Have you been subject to any regulatory or legal actions?