In recent years, the financial planning profession has changed a lot. Technically the profession is 50 years old, so you would expect some changes. But specifically, I’m thinking of all the changes I have seen since I started in the business in 2002.
- The financial advice business used to be about selling products. Back in the day, big companies made expensive products and pushed company reps to sell, sell, sell. Today, many professionals—and me specifically—have the training and technology to work independently of a big firm and to focus on providing advice first and serving the clients’ best interests at all times.
- Industry regulators are focusing on the duty of financial professionals to serve the clients’ interests. Historically, regulations sought to prevent fraud and misrepresentation, but did not concern themselves with the client’s welfare. It was common for sales techniques to promote products focused on profitability for the manufacturer at the expense of the customer. Current regulations are doing a better job of focusing the conversation on a process that helps clients meet their goals.
- The advice business has shifted from advice about what investments to own and toward holistic financial advice covering all aspects of a client’s financial life. It used to be that you pushed stocks and your co-called special knowledge about investments was a big selling point. Today, planners emphasize defining and achieving family goals.
- Financial planners now actively partner with other professionals to serve clients’ holistic goals. With the clients at the center, many advisors coordinate all-star teams of experts in estate planning, life insurance, tax and accounting, investment management and other disciplines. This delivers a better experience for clients since they get a more consistent process. And outcomes are often better since various disciplines of a plan are coordinated around a common goal.
- Technology has advanced to provide independent professionals with world-class resources and the tools to create more relevant financial plans. Once upon a time, a financial plan could be a boiler plate binder with a handful of details penciled in. Today, planners apply new methods to identify a client’s financial objectives, attitude toward risk, return expectations, and financial traits. This detail allows for more advanced financial planning and investment management.
- Technology allows us to better understand the variability that is built into the process of building wealth. With advanced research and robust analytics tools, planners have a more sophisticated view of the impact that client behavior and investment selection can have on the overall success of a financial plan. And planners are better prepared to advise families on how to maximize their opportunities.
- Investments are cheaper and more sophisticated than ever before. It’s easier for independent planners to create custom portfolios for each client based on specific and detailed goals. Many technologies are baked into the investment planning process so that planners can deliver more consistent results for clients.
- Technology allows clients and advisors to communicate more and differently than before. Today, you can review a blog archive and video library of an advisor and virtually get to know them before you call for the first appointment. Clients can monitor their progress toward financial goals daily (although I don’t recommend that because it can cause unnecessary anxiety). Planners and clients can meet more often and in more varied ways, whether in person, over the phone or video conference. The increased dialog helps the entire process.
- Financial planners can join communities (like the Certified Financial Planner Board of Standards) to increase their professional capabilities and support their commitments to continued improvement. These communities offer insight into best practices, ongoing investment education and access to quantitative tools.
- Financial planners centered on client goals create succession plans that ensure continuity for clients. Rather than being a sales rep with a list of clients that gets handed to the next person up, today’s financial planning practice has an intentional succession process to ensure consistent advice for clients in the event their primary advisor should leave the business.
A great place to start looking for the right advisor is to talk with a couple CERTIFIED FINANCIAL PLANNER™ professionals.
To find a CFP® professional near you, start your search here.
As you visit with financial planners, I suggest a couple things to check:
- Is the advisor always the client’s advocate – a fiduciary advisor?
- Is the advisor only paid by clients, not any financial product manufacturer or distribution network? That would be a fee-only advisor.
These two points help assure that you are working with a professional who is committed to your best interest at all times. It seems sort of obvious to me that a professional would work in this way, but it’s not automatic.
A fiduciary, fee-only, CFP® professional can help you make great retirement income choices and develop a comprehensive financial plan that is driven by your goals and priorities and addresses all aspects of your financial life. With a big-picture approach, you will be better prepared to understand your options at every step along the way.
Yes, I am a CFP® professional. I’m always a fiduciary and I only work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice.
If this article has you thinking about your own circumstances, contact my office at firstname.lastname@example.org. I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.