 Hi, I'm Bob Powell of the street and today I'm talking with Shannon Pike who is president of the financial planning Association and we're here to talk about a really complex issue, which is how do you pick a financial advisor and Shannon you wrote a little bit ago that most people tend to pick financial advisors based on compensation are they fee only are they fee based are they Commission but you wrote an op-ed that suggested that maybe that's not the way to go about picking an advisor that maybe they ought To pick someone based on their competency. So talk a little bit more about that. Sure. Well, thanks Bob for having us Yeah, too often times People will look to the compensation as a way to select a financial advisor And yeah, that that op-ed piece that I wrote was trying to clarify the purpose of it's not that compensation is not important But it shouldn't be your first filter in choosing and unfortunately that narrative has been out there because of all the The language around how one gets compensated So to roll that forward then what we should be looking for just like any other professional when you or I are higher anybody else We should be looking for someone who's competent So how do you choose a financial planner who's competent and what are those things you should be looking for? So first and foremost FPA has been a strong believer in the CFP marks So first and foremost we believe that you're going to select a financial advisor You should be selecting one who's a certified financial planner We believe that the the marks carry the rigor the experience the ethics The examination requirements basically the rigorous standards to become a professional and as a foundational part of The profession choosing a certified financial planner is first and foremost on our list when you're choosing a competent financial planner But it's not the place where you end your journey. Absolutely not So just like in any kind of education or any other marks you want that to be your baseline But then you really need to go get go deep into the conversation with that Perspective financial planner and ask what are they going to do for you need to look at things like how long they've been in the business? What's their experience? What are the things that they work in beside their business in other words if I'm if you're going to hire a financial planner? Are they going to tackle a holistic approach things like cash flow? Are they going to tackle your tax situation? Are they going to look at your retirement planning your other goals that you're looking for maybe estate planning in other words? Do they have the expertise to cover the all the areas that you are looking for when you're needing financial advice? So how important is it that someone go to an advisor who is competent in the things that? That they have clients that are like you right? So for instance if someone's saving for college or someone's saving for retirement or someone's in retirement and your retirement income plan You wouldn't necessarily go to a financial advisor who's never built a retirement income plan. No, absolutely And that's why I'm saying you know as a certified financial planner You are probably and you know generally have expertise in all those areas, but many financial planners will have specialties So for to use that example if you're looking for someone to build a retirement income plan for you But they're really focuses on college planning or maybe they do a lot of estate planning That's a great question to ask is that might not be the right fit because they have a niche or a specialty now That specialty might be great if they do have retirement income planning expertise But they also have those the other areas that they also touch on because frankly in my humble opinion Not every single every single thing that you want to accomplish can't be done in a vacuum In other words if you're gonna do retirement income planning It'd be nice to have someone who has some tax background who also has some cash flow budgeting In other words, they're still holistic enough to look at your whole picture to make sure that those air at the other areas Or at least touched upon right so financial planners They have something if they're regulated by the SEC they can't necessarily give testimonials But you can talk to at least three of their clients Absolutely get a sense of whether this advisor is right for you because so often It's really hard for anyone to distinguish if this person's right for me based on a one-hour consultation Yeah, so that yeah that one-hour consultation that we've talked about before should be in my humble opinion free I Give referrals out so I've had prospects ask, you know Can I talk to other folks, you know who you've worked with you know to see if it works But don't be afraid also to ask for a second follow-up conversation in other words You are engaging into a relationship a trusted relationship So if that first conversation doesn't necessarily get you over, you know All your questions through that ask for a second follow-up meeting ask for the referrals And there's nothing wrong with interviewing a few financial planners as well Right, so this is a hard process because most people are afraid of financial advisors They don't trust them and there's lots of barriers Is there a checklist or something that people could use to sort of go through as they're interviewing perspective financial advisors? Absolutely FPA puts out a Very robust checklist of things that you need to be addressing when you're interviewing a financial planner some of the things I just touched on like how long you've been in the business You know, what's your specialty? Do you have a specialty? Do you cover those any other areas that I mentioned? You know things like how how am I going to be working with you am I going to be working with you specifically? Do you have a team that I'm going to be working with are you registered as a registered investment advisor? Are you registered, you know with a broker-dealer? How are you compensated again? You started off the conversation with compensation. Don't get me wrong Compensation is something that should be disclosed to all perspective clients And that is a very important thing for everybody to understand how they're going to pay for that advice again We just don't want it to be the first entry to go You know interview somebody and there's a whole litany of the other questions that you should be asking They should be giving you giving you their disclosure pages, right? They should be looking at Yeah, the things like how often are we going to meet? What is our communication style? What kind of reports am I going to get? There's all things that there's all kinds of different things just like when you're interviewing a doctor Interviewing an attorney There's all kinds of things that you should be looking for or asking FPA has a great checklist to your point about a foundational checklist to go through that to try to get a baseline Are they asking you know from a requirement of regulation but also that experience and more importantly back to your original question Are they competent enough to take care of the issues that I want to be addressing for me and my family, right? And they can find that checklist on the FPA website on what actually if for for your readers they could go to Planner search comm or plan to search org I'm sorry where you could go look for financial planners in your area and on that site is a robust checklist for those interview questions Alright anything else we should mention before we close our interview well Obviously, you know financial planning is important in today's times with so many things going on where I got Regardless of its tax reform or the other thing is going on with the markets Bitcoin in other words a financial planner who's holistic and again Who's a certified financial planner can can help your readers dive through those issues that they're addressing all right Thanks, we've been talking with Shannon Pike president of the Financial Planning Association on Bob Howell with the street