What should I look for in a Financial Planner?
It is important that you find a Financial Planner that you can trust. Someone with whom you will feel comfortable discussing both your financial and personal hopes and dreams. Like your family doctor, it is important that your Financial Planner have a good "bedside manner". You should select a Financial Planner who can communicate effectively with you without resorting to unnecessary industry jargon.
Unfortunately, anyone can call himself or herself a Financial Planner, Financial Consultant, or Financial Advisor. It is important that you select a professional with some sort of professional licensing or advanced designations. The most well recognized license is the Certified Financial Planner (CFP®) mark administered by the Certified Financial Planner Board of Standards in Denver, Colorado. There are many other professional designations that can attest to the professionalism of your Financial Planner. A few of the better-known professional designations and/or licenses to look for include Chartered Financial Consultant (ChFC), Chartered Financial Analyst (CFA®), and Certified Public Accountant/Personal Financial Specialist (CPA®/PFS®). Click here to view "10 Questions to ask when choosing a Financial Planner".
What is a Fee-Only Planner?
This term refers to the method of compensation for the financial planner, or the financial planner's firm. Fee-Only planners are compensated solely by fees paid by their clients and do not accept commissions or compensation from any other source. "Fee-Only" planners believe there is a significant "conflict of interest" if an advisor stands to gain financially from the purchase of any product he or she recommends to the client. Most Fee-Only advisors are paid a fee based on the size of the assets that they manage, or they charge hourly fees in a manner similar to your attorney or accountant. It is not uncommon for a commission-based financial planner to charge a fee for the preparation of a financial plan, but then offer to implement the recommendations utilizing mutual funds or annuities that will pay them a commission
Several consumer financial publications have recognized the value of "Fee-Only" Financial Planners:
NEWSWEEK - Jane Bryant Quinn
"Financial Planners who take commissions have a built-in conflict of interest...even with disclosure, my choice would be a Fee-Only Planner."
"Start with the general practitioner...a Financial Planner (whose) compensation should be from fees alone."
"The most important matter is how the planner is compensated. Hire the planner who...has no financial stake in (your) investments."
My current Financial Advisor is paid a salary by their firm and not commissions. If my Financial Advisor does not receive commissions directly, does a conflict of interest still exist?
Perhaps. Even if your financial advisor is paid a salary, the advisor's firm may be accepting commissions from the sale of financial products. There may be quotas placed on the "salaried financial advisor" in order for the advisor to justify their salary to the firm. If the advisor does not generate enough commissions for the firm during the course of the year the advisor's salary may be reduced. In addition, most financial advisors who are paid a salary by their firm also receive quarterly or annual bonuses based on their sales or "production". Although these advisors are not relying on commissions for 100% of their income, even a small conflict of interest (such as a year-end bonus) could potentially compromise the advice that you receive.
How can I check on the background or credential of my Financial Advisor?
Most financial advisors are regulated by one or more regulatory bodies. To check on the background or disciplinary record of your financial advisor you can contact one of the following regulatory agencies:
Certified Financial Planner Board of Standards: (888) CFP®-MARK
Financial Industry Regulatory Authority: (800) 289-9999
Securities and Exchange Commission: (800) 732-0330
Why do I need a Financial Planner or Investment Advisor?
A Financial Planner or Investment Advisor can provide direction and meaning to your financial decisions. A Financial Planner helps you to understand how each financial decision you make affects other areas of your finances. Decisions you make today can affect not only you, but also your entire family including future generations. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.
How can a small Independent Firm provide me the same type of services as a bank, credit union, or national brokerage firm?
At Burns Matteson Capital Management all of our customer accounts are held at Charles Schwab & Company, one of the largest brokerage firms in the world. Our relationship with Charles Schwab allows us to offer a wide variety of products and services to our clients that in many ways surpass the offerings available from some of our larger local competitors. We feel that we bring our clients the best of both worlds: the size and strength of Charles Schwab & Company combined with the personal attention of a local Investment Advisor.
I’m concerned about investing with a firm that does not have the “brand name” of a bank, credit union, or national brokerage firm. What happens to my money if you go out of business?
At Burns Matteson Capital Management, our sole role is that of an advisor. At no time in our relationship do we take custody of our client's funds. All of our client's money is held in their brokerage account at Charles Schwab & Company. In addition to the peace-of-mind that comes from investing with a "brand name" like Charles Schwab & Company, the Securities Investor Protection Corporation (SIPC) provides up to $500,000 to protect your securities held at Charles Schwab & Company ($250,000 for claims of cash balances). In addition, Charles Schwab & Company provides an additional insurance policy via a third party insurance company (http://www.schwab.com/public/schwab/nn/sipc_account_protection.html). This protection is in the event of a failure of Charles Schwab & Company only and does not cover fluctuations in the market value of your securities.
I am very concerned about the privacy of my personal financial information. How can I be assured that you firm will treat my data in confidence?
The safety and security of your personal information is of the utmost concern at Burns Matteson Capital Management. Unlike large brokerage firms, banks, credit unions, or insurance companies, staff access to client records is on a "need-to-know" basis. It is a common practice of larger institutions to "cross-sell" other products and services to their investment customers. This practice may allow some of your personal information to be viewed by other divisions of your large institution for the purposes of "selling" you additional products and services. As an independent firm, we have no products to sell. Our sole source of compensation is from the retainer fees paid by our clients, eliminating this conflict of interest and protecting your confidential information.