Working With a Financial Counselor

A little good advice can go a long way. Our lives become a series of decisions and consequences, and some people just appear to make better decisions than others. Why is that? Wise counsel, and intelligent decision making can lead to better decisions. You may be able to get knowledge from books and sources, but experience teaches you the lessons you never forget. If you can learn from the mistakes of others, then you won’t have to make them all yourself.

We have always looked to the legal profession and the JD to provide us with advice and counsel. We have looked to the accounting profession, and the CPA to provide us with tax guidance and advice. In the financial services industry the CLU designation was the original designation of The American College in Bryn Mawr, PA for the insurance industry, where the Chartered Life Underwriter credential meant their members had training and expertise in life and disability insurance, as well as financial and business planning, wealth creation and conservation, retirement and tax planning. Years later the College for Financial Planning in Denver, CO awarded the CFP® (Certified Financial Planner) certification, which is held by Melissa Shaw.

Could you benefit from working with a professional financial planner? Learn more about your financial options at the Melissa Shaw CFP® site. Click Here.

Professional Credentials can help you assess how much knowledge your advisors have.         

  • CPA — Certified Public Accountant has expertise in tax planning for individuals and business.
  • PFS — Personal Financial Specialist is a CPA who specializes in financial planning.
  • CFP® CERTIFIED FINANCIAL PLANNER™ professional specializes in financial planning, investments, estate, tax and retirement planning.
  • CFA — Chartered Financial Analyst focuses on investment analysis and management.
  • JD — Juris Doctorate having a thorough knowledge of law.
  • CLU — Chartered Life Underwriter has expertise in insurance, financial, estate building and transfer, retirement business and employee benefits including pensions and group benefits.
  • ChFC — Chartered Financial Consultant provides assistance with comprehensive financial and business planning in addition to insurance, wealth management, retirement and tax planning.
  • RIA — The Registered Investment Advisor is required when a fee is charged for investment advice. It was required with the Investment Advisor’s Act of 1940. It requires registration with the state and possibly the SEC. There are many disclosure and compliance guidelines associated with the RIA requirements.
  • EA — Enrolled Agent has specialized training in the area of taxes and holds a Federal license that permits them to represent taxpayers before the IRS in all areas (examination, appeals, collection), regardless of the state where the taxpayer lives.      

As the “Money Game” gets more complicated throughout your life, good advisors may become more important. Looking at your situation with you, an advisor can lend perspective and help focus on the issues. The job of a good advisor should be to help you make better decisions about money, but also to be sure that things occur to you and that you don’t lose the game out of ignorance.

How are financial advisors compensated? Insurance and other financial services were built using a commission based distribution system. The broker was paid a fee to perform a service. When this is true, there is no charge for the planner’s advice or preparation of a plan. Compensation is received solely from the sale of financial products you purchase to implement the recommendations. It is an opportunity to build on a relationship, and work to meet the needs of the consumer without upfront costs.

Financial advice for a fee has become increasingly popular. That fee can be charged for a specific project performed, or to manage money and give investment advice. Many planners incorporate a little of both, in order to meet the needs of the client and the markets.

There is no right or wrong way to compensate for good advice. The greater issue may be that of disclosure. Understanding how fees are charged, and when commissions are earned is part of the process. You must be comfortable asking questions to clarify information. Compliance in securities and financial services requires communication, information and signatures. A good advisor will help you be comfortable working through the process of financial planning.

Where can you go to learn more about finding a good advisor? The associations that financial professionals belong to can be a resource. The Society of Financial Services Professionals can be found at www.societyoffsp.org and the Financial Planners Association is at www.plannersearch.org. These organizations have a national presence and can help you select someone near you if you need assistance. It is always good to interview more than one planner, and be sure to find someone you will be comfortable working with.

What questions should you ask when looking for a financial advisor?

  • What financial services do you provide?
  • How would you prepare my financial plan?
  • How are you compensated for developing my financial plan and follow up services?
  • How would you help implement my financial plan?
  • What licenses and registrations do you have?
  • What professional credentials and other educational background and experience do you have?
  • What is your area of specialty?

This short list will get you started. Both the insurance and securities industry have strong compliance issues to encourage disclosure and suitability. You should be able to find out enough information about your advisor to feel good about building a long term relationship with them.

Scroll to Top