Our business is financial planning. As experienced financial planners, we have a specific view on what we think you should receive from your financial planner. First of all, no one will look after your interests with better intentions than you yourself. Don't be afraid to ask financial service professionals to disclose their fees. It's your money and you have a right to know where it's going and why. Consider the following questions in context of what best meets your needs and desires.
Do you know how your Financial Planner is paid?
There's a lot of talk in the financial industry about the various compensation structures of financial service companies. Some companies are commission-based, some are fee-based or fee-offset and still others are fee-only. What does all this mean? First and foremost, we believe that a company's source of compensation should always be disclosed openly and should feature no potential conflict of interest. The fee-only compensation structure succeeds on both counts.
In the business world, an individual's compensation is their incentive. For example, at a car dealership, the salesperson is compensated based on the type of car and final sale price of the car. The incentive for the salesperson is to sell the most expensive car at the highest price. In other words, there is a conflict of interest between the car buyer, who wants the best car at the lowest price, and the salesperson, who wants to sell the most expensive car at the highest price. Most people recognize this conflict of interest and treat car salesmen with appropriate cynicism. What if car salespeople were paid a fee directly from the car buyer for finding the car that best fit the buyer's needs instead of being paid commissions by the dealer? Would this affect the way the buyer and seller do business? We think so. In such a case, the salesperson's business model would be to serve the car buyer and not the car dealer. The more enthusiastically the needs of the client are met, in price and suitability, the more business and referrals this salesperson would receive in the future and the more successful he or she would be.
The same conflict of interest exists in the financial planning industry. If a financial planner makes commissions or incentives from the recommendation or sale of products, then there is a potential conflict of interest between the planner serving the best interest of you, the client, or the planner earning a bigger paycheck. The financial world is complicated enough without you having to worry about whose interest your financial planner is protecting.
BFP is a Fee-only financial planning company. Our fee is fully disclosed and paid directly from the client. There are no hidden charges; we believe in full upfront disclosure. We work to build relationships and trust with clients. Regardless of the investment or recommendation, our fee is the same and we accept no outside commissions or referral fees. We work 100% for you, the client. [top]
What is your financial planner's experience? What are his or her credentials?
The Financial Services profession has many designations. The leading, and arguably most qualifying designation is that of Certified Financial Planner™ (CFP®). Designees must complete studies in all areas of financial planning and then must pass a 2-day comprehensive exam. Certified Financial Planners™ must also meet continuing education requirements to keep the designation current (check CFP® status). In addition, all CFPs® must maintain the CFP® code of ethics and professional responsibility. This is not to say that the designation is an indication of experience, rather it certifies that the recipient has the educational background necessary to understand the components of financial planning.
In conjunction with the educational background, the experience of the Financial Planner is crucial. How long an Investment Advisor has been in the business and the combined years of experience in the industry will give you an idea of how much the financial planner can help you. Check out the Resources section to read some articles on how best to choose your financial planner.
BFP has been in business since 1997. We have over 40 years of combined experience in the finance industry. John and Colin have both achieved the CFP® designation. We have references available upon request. [top]
How does your Financial Planner select investments for your portfolio?
Are your goals being addressed in the investment selection process? Investing is less about making speculative investments than it is about creating an investment allocation to achieve your goals. Everyone's situation is unique based on their age, income, expenses, savings, investments, health, values, family… and a great many other factors. Financial Planning is a process that takes these factors into account to provide a strategy for selecting the right investments for you.
BFP focuses on comprehensive financial planning to create portfolio designs and investment strategies. These strategies are employed to meet your long-term goals. We are not tied to products or other proprietary services. Our investment selection focuses on your needs and because of our independence we can offer a full range of investments and services to meet your goals. [top]
Are you getting what you need out of your relationship with your Financial Planner?
The financial planning company you choose should offer services that meet your needs and goals. Many financial service companies offer a particular service such as selling insurance or picking stocks. If you are seeking a company to give advice in all areas of personal finance then you need to look for a company that offers comprehensive services. Whatever your goals, they should be the financial planner's focus.
Not only is it important to use goals to design an investment strategy, it is just as crucial to track your progress toward your goals. Are you ahead of schedule? Behind schedule? On schedule? These factors can help determine the adjustments necessary to arrive at your desired destination. Will your risk tolerance change as you get closer to achieving your goals? Determining, tracking and monitoring your goals gives you and your planner a focused strategy.
Goal-Oriented Questions to Ask Yourself:
BFP's focus is on the "big picture"- getting all areas of your personal finances to a point that achieves or supports your life goals. We believe that your goals should be the driving force behind making and implementing financial recommendations. In establishing goals it is important to review performance and track progress toward achieving your goals. Measuring goals versus reality gives you an excellent opportunity to hold your financial planner accountable regarding the recommendations he or she makes. As comprehensive, fee-only financial planners, we welcome this accountability. [top]
What is your Financial Planner's ongoing commitment to you?
How often do you meet with your financial planner? Is he or she accessible? Can you talk to your planner whenever you need advice on buying a house or a car? On switching jobs? When having children? When evaluating business ventures? Does your financial planner encourage ongoing communication? Can your financial planner refer you to a qualified CPA, estate attorney or insurance representative without you worrying that there is a commission involved?
It is important that your financial planner be involved in the development of your financial well-being. Who better than having a financial professional involved in your life as you make decisions that will impact your financial goals.
At Bell Financial Planning Co., we encourage you to keep us involved in your financial decisions so you can make informed decisions that support your goals. We meet with clients at least once a year or whenever you need us. In the first year of service we may meet as few as three times or as often as it takes to get the job done right - often five to seven times. In subsequent years, we revisit, among other things, your goals, your progress toward those goals, your investments, your taxes, your insurance, your implementation of past recommendations and your family circumstances. Additionally, we are always available by phone, email or in person for any questions you might have. [top]
Does your Financial Planner do a good job of keeping you informed about your financial situation and their reasons for the recommendations they make?
Do you understand what your financial planner is talking about? Does your financial planner have the depth of experience necessary to truly understand and communicate your financial situation and their recommendations? It is important that you understand the reasons for why you are doing what you are doing. Being educated and informed about the reasonable expectations of your financial performance is crucial to a meaningful and long-term relationship. If you have questions, you should get answers that you understand.
Our goal is not only to provide comprehensive financial planning and asset management, but also to educate you about your finances in the process. We have found that helping you to understand the reasoning behind why we do what we do benefits your commitment to the implementation of the financial plan. This commitment is enhanced when you understand why and how the decisions you make affect your financial future. This is why it is not just advisable, but crucial to educate our clients about their finances. [top]
