For people who are serious about achieving their financial goals, there often comes a point in their financial journey when they find they need some outside help. Brad Lupkes, Wealth Advisor in the Wealth Management and Trust Department at Frontier Bank, says the first step in choosing the right partner for the job is to recognize when you need it.
"In my opinion, it makes the most sense to reach out to a financial advisor when you are not comfortable doing it on your own," says Lupkes. "For some people, that might be from Day 1, such as a teenager just getting started. Others might be comfortable managing their investments for several years or several decades."
When an investor does reach that point, Lupkes says it is critical to know where to start searching for a qualified advisor. This is not the time to Google "financial planners near me". Instead, Lupkes recommends starting with the Certified Financial Planner Board of Standards website, LetsMakeAPlan.org, the gold standard in the financial planning industry.
"CFP designation means that you have obtained a very high level of education and experience and have passed a difficult exam," says Lupkes, who holds the designation himself. "Most importantly, CFP professionals are held to a very high ethical standard."
When you have chosen a few candidates, Lupkes recommends asking them the following questions:
1. Are you a fiduciary and are you willing to put that in writing?
"That is key because if they are a fiduciary, you know up front that they have a legal obligation to put your interest, as the client, ahead of their own," says Lupkes.
2. How do you get paid? Does anyone else ever pay you to advise me?
"You should be working with someone getting an annual or hourly fee," says Lupkes. "There should be no hidden charges or kickback feeds. Any good advisor should be able to put this in writing. "
3. What services do you offer as an advisor? (i.e., investment management, estate planning, financial planning, coordination with a CPA or attorney, etc.)
"Most CFPs are going to do all of the above," says Lupkes. "We have been educated on a variety of different financial topics that our clients have to deal with."
4. Can you tell me about your conflicts of interest?
"Any advisor who says they don't have any is an immediate red flag," says Lupkes. "There are always some conflicts of interest and you need to understand what they are so you can work together through those conflicts."
5. What is your investment philosophy and who manages your money?
"Here at Frontier, we keep it basic. We believe in using low-cost index funds and we believe in diversifying across different types of investments rather than trying to time the market," says Lupkes." Everyone should be able to explain what their own personal investment philosophy is."
"As for their money, ideally they should be managing it the same way, using the same investment models, that they recommend to their clients."
6. Will you be the only advisor working with me? Or is my account going to get handed off to someone else in the future?
"We have a number of advisors at Frontier, but my clients can know that they are going to be working with me alone for the foreseeable future," says Lupkes. "Our clients work with us one-on-one for as long as they want to."
Lupkes recommends asking these questions of two or three candidates to get a feel of who you would most like to work with, keeping in mind that the best working relationships take time to grow.
"You are going to be working with this person for a long time," he says. "As you grow that relationship and trust that person more, you want someone willing to really understand your unique financial situation. That can really only be built over time."
Brad Lupkes, CFP®