Your financial advisor may be a wizard when it comes to helping you manage, invest and protect your money. But that doesn’t mean his or her expertise is unlimited. There may be areas in which…
Your financial advisor may be a wizard when it comes to helping you manage, invest and protect your money. But that doesn’t mean his or her expertise is unlimited.
There may be areas in which your advisor or financial planner doesn’t have the subject matter knowledge or the legal qualifications to complete a certain portion of your financial plan. And in those cases, comprehensive planners should be able reach out to someone in their network, or work with a professional a client has brought in, to answer clients’ questions and put financial planning ideas into action.
The areas in which a financial advisor’s training falls short could include tax planning, where a certified public account, or CPA, would have more nuanced or detailed expertise. Estate planning is another common area where an outside expert, an attorney, may be necessary to draft required paperwork. (Note: While pretty much anyone can call themselves a financial advisor — including, say, an employee with your brokerage firm or insurance retailer — these tips apply to professionals offering comprehensive financial advice, such as a certified financial planner.)
The advisor may have a roster of contacts in specialized subject areas, too, such as in tapping Social Security benefits or planning for the care of a child who has special medical needs. The advisor may know real estate lawyers, career coaches, college planners, insurance specialists, businesses consultants and other specialized professionals to handle a portion of your financial plan. “One of the key roles a financial planner does play is as an advocate to coordinate all those other financial professionals,” says Shannon Pike, certified financial planner and chair for the Financial Planning Association.
So how do clients make sure their financial guru is outsourcing when necessary? How do they ensure the outside experts brought in are also competent, operate in line with their clients’ values and offer affordable services? Here’s what to know.
— In what circumstances would you send me to another professional?
— Do you meet with your network of professionals on a regular basis?
— Are you compensated for referrals? How would I pay an outside professional?
When interviewing comprehensive financial advisors, you can also ask them about their own areas of expertise, including the subjects they feel most comfortable advising in. You may be at a firm where the advisors are investment whizzes, hold legal degrees or specialize in working with certain family situations. But “don’t go in there expecting your advisor to know everything,” says Frank Paré, a certified financial planner and national president of the Financial Planning Association. “Go in there expecting your advisor to have a deep bench of subject matter experts.”
Experts can be found in many ways. If you have an accountant, attorney or another financial expert you already enjoy working with, your advisor should be able to collaborate with that person. When you don’t have one of these experts in your Rolodex, a good advisor should be able to recommend one or help set you up with someone new. Some firms may have experts like tax accountants working in-house.
In fact, access to these subject matter experts can be considered a service you get from your advisor or financial planner. Instead of having to interview and compare notes on five different estate attorneys, your advisor can shorten that search process.
Look out for red flags. If you suspect that your financial advisor is overstretching himself or herself — perhaps by offering to draft legal documents when he or she isn’t an attorney — trust your gut, says Jill Schlesinger, certified financial planner and senior ambassador for the CFP Board, which sets and enforces the standards for certified financial planners. It might be time to ask better questions about where this advice is coming from or find someone else who has a better sense of the limits of his knowledge.
Don’t feel rushed or pressured to act on advice without bringing in another expert. “I think the easiest way to stop the presses, to delay this process, is to simply say, ”You know what? That’s interesting, but I’d really like to get an accountant to weigh in on this,'” Schlesinger says.