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Are you getting your money's worth from your adviser?
If you have a financial planner, it's important to periodically evaluate his services to make sure you're getting your money's worth. Here's what you should expect:
A comprehensive financial blueprint. Your adviser should counsel you on all the major elements that affect your economic future. That means evaluating your investments, tax situation, insurance, estate plan, pension fund, real estate holdings, debt management, and the consequences of events like marriage, divorce, and childbirth.
Your planner should work with you to develop a financial blueprint consistent with your age and risk tolerance, figuring out how much you'll need for retirement, college tuition, and other goals. He should calculate how much you'll need to save to reach those goals, and help you determine where the money will come from.
Wide-ranging knowledge and referrals. The type of plan an adviser gives you often depends on his background. If the adviser started out selling insurance, his blueprint for your financial future may stress insurance; if he's a former stockbroker, he'll tend to focus more on investments.
A planner who has experience working with physicians can advise you on matters like practice buybacks and the financial impact of practicing on your own or in a group. Some experts believe a financial planner should even be able to counsel doctors on partnership buy-ins and buyouts, various types of compensation, and hands-on practice management issues involving billing and accounts receivable.
Unbiased advice. Your first meeting with a planner shouldn't cost you anything, nor should it focus on only one aspect of your situation, such as insurance or investments. Be wary if the planner wants to rush you into a "great" deal, change your investments without good reason, push products without considering your goals, or sell you a lot of insurance when you already have coverage.
Remember that if a planner gets paid by commission, he has an incentive to steer you toward particular products, such as mutual funds or insurance policies, on which he receives compensation. Still, if he's doing his job properly, he'll place your best interests first, regardless of how he's paid.
Regular meetings. Your adviser should get together with you at least once a year to see whether your plan is on target. He should also be willing to sit down with you whenever your life situation changes because of a divorce, an inheritance, a house purchase, or other important event.
The adviser should monitor your investments carefully, and before making big changes he should consult you and explain his rationale. In general, avoid giving him a free hand.
Ultimately, you must use your instincts to judge a planner. The one you choose should not only be well-grounded, comprehensive, and attentive, but also someone you trust.
Vicki Brentnall. Grading your financial adviser.
Jun. 6, 2003;80:57.