I recently had a conversation with a woman about the challenges of finding a trustworthy financial planner. A common request we get at the church is for a financial planner referral. Though I am blessed to know a fair number of great financial planners, the church policy has been to abstain from making referrals because of the potential liability factors.
That being said, I know that selecting a great financial planner can dramatically help a person reach their personal and financial goals. In fact, Proverbs 15:12 says “Plans fail for lack of counsel, but with many advisers they succeed.” There is tremendous wisdom in having counsel, so in order to resolve this dilemma, I’ve put together three attributes that are important in selecting a great financial advisor.
Does a planner know what they are talking about? Though there is benefit of having various industry designations (CFP, CFA, CPA, etc.), they do not always mean someone is competent. One of the best ways to identify the competency of a planner is by asking a lot of questions. How long have you been an advisor? What qualifies you to give financial advice? Why are you suggesting the specific course of action that you are giving? Though sometimes the answers may not give you the full scope of their competency, these type of questions help you get a better understanding of the advisor.
Part of the competency equation should also include the heart of a teacher. Not only should the advisor be able to justify why their advice is sound, but they should be willing to help you as the client understand their reasoning. If they are using words or terminology that is confusing, I’d encourage you to ask clarifying questions. A good advisor is not just giving advice, they are working to help you feel more competent and comfortable with your investment decisions. If you walk away from a conversation with an advisor feeling more confused than when you walked in, I’d likely seek additional counsel.
Is the person truly working for your best interest? This may seem like something you’d expect from people working in the financial advising space, but unfortunately, is a big area of concern. Though I feel most advisors are trying to do what is in the best interest of their clients, many unfortunately work in a business model that isn’t structured to do so. There are many conflicts of interest built into the Financial sector that make it difficult to work in the best interest of a client. For instance, many large firms will push specific products or services, requiring their staff hit quotas or sales goals. Think about the inherent conflict to this structure; how can you possibly expect the best advice if your advisor is required or being paid incentive to recommend a specific product?
Just because someone works for these organizations does not mean they lack character, but you do need to be careful about understanding why they are giving you the specific advice. A great question to ask any advisor is “How do you get paid?” Many work with a Fee-based model, meaning they charge you a set amount based on the work they’re performing or they receive a percentage fee based on your Assets Under Management. If, however, someone is compensated by selling highly commissioned products, you should be very careful in trusting their advice.
The last characteristic you should consider is their worldview. Though I am often hesitant of someone who leads with, “I’m a Christian so you can trust me”, I do feel there is a benefit in selecting an advisor who is a follower of Jesus. I’m often surprised, though, how many Christians who work in the financial space do NOT integrate their faith into their counsel. We as Christ Followers are called to look at this world differently. Earth is not our home, yet many “Christian Advisors” give advice that looks the exact same as non-Christian advisors.
Jesus tells us in Matthew 6:19-20, “Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal.” So should we not save for our latter years? Of course not, taking care of the needs of our family is a part of our testimony (1 Timothy 5:8), and are even challenged by the apostle Paul to not be a financial burden on our children (2 Corinthians 12:14)
A Christ-Centered financial advisor should be helping us have the right perspective on money. Their job is to help refocus our minds and hearts to see resources as a tool that God has entrusted to our care. One organization that is working hard to help Christian advisors integrate their faith into their business is Kingdom Advisors. They train advisors all over the country in this process, so if you truly are starting from scratch on picking an advisor, their referral network may be a good starting place.
As I wrap up this post, I do want to reiterate that having all three of these qualities is critical. I’ve talked to many people who simply used an old college friend or a brother-in-law to help with complicated questions, only to be sold a product that doesn’t help them reach their long-term goals. Don’t rush the process, and make sure to speak to at least three people before choosing your advisor. Be prayerful as you seek out counsel, knowing that God will direct your steps when you seek his guidance.
Written by Financial Stewardship Pastor Ryan Kaczmarek.
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