Can you recommend a good financial planner? is among the most common questions I’ve received over the years writing on personal finance. Problem is, finding a financial planner who is trustworthy, competent and comes at a reasonable cost is hard to find.
The stakes, if you’re nearing retirement, are steep.
“The cost of bad advice at that point of life is high,” says Pam Krueger, host of the public television investor education series Money Track and a registered investment adviser. “You can’t get the money back.”
Wealthramp: A Match.com to Find a Financial Planner
Krueger has just come out something called Wealthramp, a nifty way to find a vetted financial planner through a unique algorithm. I’ll tell you about Wealthramp shortly, but first let me briefly mention the various types of financial advisers people typically consider as the near retirement.
Many turn to advisers at brand-name brokerage firms, banks and insurance companies. That kind of retirement advice leans toward managing investment portfolios and the adviser is usually paid through a mix of commissions and fees.
Others work with fee-only planners at wealth management firms and registered investment advisers. These pros offer a broad overview of household finances in retirement, but their expertise isn’t cheap. That’s why they usually want clients with substantial assets.
Near-retirees can now also turn to either high-tech robo-advisers (automated low-cost financial platforms) or hybrid robo-advisers that combine automation with human-planner consultations.
And, for DIYers, there are electronic retirement planning platforms like ESPlannerPLUS ($199) and ESPlannerBASIC (free). The Retiree Income company, founded by Baylor University’s William Reichenstein and financial planner William Meyer, has two helpful products for specific issues: Social Security Solutions (to help decide when to start claiming Social Security; $19.95 or $49.95) and Income Strategy (to help figure out retirement withdrawal strategies; $20 a month or $50 a month).
How People Typically Find Financial Planners
The classic starting place for finding a professional financial adviser is to reach out to friends and colleagues who have one and supplement that by visiting the websites of the National Association of Personal Financial Advisors and the Certified Financial Planner Board of Standards.
That’s fine, but it requires a lot of legwork. And this is where Pam Krueger’s Wealthramp comes in.
The Wealthramp site matches financial planners she has screened and certified with potential clients. You answer an easy two-minute survey with questions about what you’re looking for in a financial adviser and where you live, then Wealthramp finds ones that fit your needs. Think Match.com for the personal finance business.
“The biggest users of Wealthramp by far are folks in their late 50s, staring at the starting line of retirement and they are freaking out,” says Krueger. “How do I know that my $500,000 will last?
How Wealthramp Works
Krueger tested and built Wealthramp over several years; it’s now available for prospective customers in about 70 markets, with roughly 225 financial advisers.
Krueger’s initial screening offers some confidence that the planners in Wealthramp are competent and trustworthy. She examines what’s known as their ADV form from the Securities & Exchange Commission. It has information about a planner’s philosophy, experience and regulatory history.
If Krueger likes what she sees, she checks out the business, including the quality of its financial plans. Critically important for Krueger, and for customers: Wealthramp advisers must be fiduciaries, legally bound to put the client’s interests first.
Sad to say, much of the financial advice business, including stockbrokers, broker-dealers and insurance agents are usually held to the less rigorous “suitability” standard. That means their advice must be suitable for the client after taking into account factors such as age and income. The suitability standard only requires disclosing conflicts of interest. Being a fiduciary requires avoiding conflicts of interest.
Wealthramp planners must also be fee-only, meaning they don’t charge commissions for financial products. That helps prevent clients being put into investments simply because they’ll make the adviser the most money. Also, Wealthramp planners must have a professional designation that shows they’re well versed in personal finance, such as a CFP (Certified Financial Planner) or a CFA (Chartered Financial Analyst.)
Kruger doesn’t share potential customer information with the advisers; only if you find a planner on Wealthramp and hire him or her, does Krueger get a referral fee, paid by the adviser.
If you find potential advisers on Wealthramp, you can then contact them for a consultation and decide whether to hire one. “You need to make sure that you are comfortable with the professional,” says Ross Levin, founder of Accredited Investors Wealth Management in Edina, Minn.
Taking Wealthramp for a Test Drive
Curious, I created an account at Wealthramp. Although I’m based in Minnesota, I told Wealthramp I’d be okay working with an adviser long distance.
The questions — including my financial goals and how I want to interact with an adviser — were useful. The Wealthramp algorithm promptly matched me with three potential advisers who seemed appropriate for my needs — one in Chattanooga, another in Tempe, Ariz. and the third in Charlotte. (I didn’t follow up since I’m actually not in the market for a planner.)
Krueger bluntly calls today’s financial planning landscape “a mess.” She’s right. The industry is confusing, with multiple kinds of professionals offering essentially similar services yet bound by different standards and practices when it comes to giving retirement advice.
Not everyone needs a financial planner for retirement. But if you do feel the need to hire one, the benchmarks Krueger uses to screen her advisers are good ones.
Wealthramp can help you winnow through the planner wheat and planner chaff. You still must do your own due diligence, however.
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