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Aug 14, 2017

Friends Talk Finance: Choosing a Financial Advisor

What is a Financial Advisor?

  • Who can call themselves a FA? 
  • Read more on Bonnie's Blog 
    1. Certified Financial Planner™ or CFP®
    2. Chartered Financial Consultant or ChFC
    3. Certified Public Accountant/Personal Finance Specialist or CPA/PFS

What is fee-only vs Fee-based?

  • We recommend FLAT FEE only -  a step beyond fee only which can also include AUM fees
  • Read more on Bonnie's Blog

What is the fiduciary standard?

  • What does this mean? Like hippocratic oath for FAs
  • What is NAPFA?
    • National Association of Personal Financial Advisors. NAPFA is the most recognized national organization of true fee-only FAs. To qualify for NAPFA membership, the applicant must submit a financial plan for review, take an oath to be a fiduciary in all client relationships, and comply with annual continuing education requirements.

What's the difference between Financial advisor and financial planner?

  • Seems like most FAs really don’t do much but manage portfolios. And this leads many ppl to believe the retirement portfolio IS the plan...it’s a tool not the plan
  • A typical financial advisor is like a doctor who always writes the same prescription to every patient. No history, no vitals, no work up and no follow up.
    A financial planner, on the other hand, never prescribes without a complete history (your money history and habits – your psychology) and work-up. Expect to spend the first several meetings with your FP to delve into you and your goals and then together, develop the right plan for you.
  • What real FPs (see Bonnie's Blog for list)

How to find and vet a financial advisor:

Other ways people plan:

  • Robo-Advisors
    • Lower fees because there aren’t human advisors helping you
    • A robo-advisor is an online, automated portfolio management service. Because these companies use computer algorithms to manage client investments, robo-advisors can offer their services for a fraction of the cost of a human financial advisor.
    • Lower fees because there aren’t human advisors helping you
    • Taxable accounts
  • Hybrid Services
    • Personal Capital is an example
    • Services provide access to a human, but not personalized service
    • Taxable account
  • Sofi Wealth Management
    • Humans manage portfolios
    • Excellent fees rates (Free for SOFI borrowers)
    • Taxable account

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