Financial Planning Help: Three Easy Steps

By Dr. Steve Sjuggerud, Chairman, Investment U
Monday, September 22, 2003: Issue #275

“People who spend a week choosing a furniture refinisher will sign up with the first [financial planner] who calls. People who circle junkyards for matching hubcaps will buy mutual funds without reading the prospectus. People who check the expiration date on cottage cheese wouldn’t think of investigating the background of their broker. They know next to nothing about whether the broker has made or lost money for clients, whether he’s been reprimanded or sued, or how long he’s been in the investment business.” ~A Fool and His Money, by John Rothchild, 1988

Go ahead hang a shingle and call yourself a financial planner.

What? You don’t have any qualifications? Don’t let that stop you unlike being a doctor or lawyer, there are no requirements to be a financial planner. No education and no experience necessary. I’m not kidding.

And that’s scary. Think about it: When you seek out “professional” financial planning help, just how “professional” is the help? You need to know.

So that’s what we’ll cover today how to find the right financial planning help for you how to do the homework on the person that will have your money and ultimately, how to find the right financial advisor that can actually do you some good.

The Secret Behind Finding Financial Planning Help

After finishing a degree in finance at the University of Florida, I started out as a stockbroker. This is when I was faced with the reality of it all stockbrokers are basically salesmen that don’t know anything about investing

There are two basic facts: Stockbrokers are not paid to LEARN about investing. They are paid to SELL MORE. The more time they spend selling, the more they make. The more time they spend learning about investing, the less time they’re spending selling. It’s to the point where a broker may be better off spending his time reading books on “how to sell” instead of “how to invest.”

This seems crazy, I know. But it’s true. How could it be?

It comes down to the division of labor Investment firms have a research department, an operations department, and a sales department. The sales department (the brokers) is not supposed to concern itself with exactly what it is selling. That is for the research department (or the home office) to decide. Just as folks in the operations department aren’t allowed to make sales calls, the stockbrokers aren’t allowed to make investment recommendations that haven’t been approved by the research department or the home office.

In other words the brokers that deal with the public aren’t allowed to think for themselves. This is how firms get around worrying about whether or not their brokers actually know anything they don’t let them think for themselves.

Financial Planning Help You Can Use: How To Find An Advisor With A Brain

It’s hard, actually. But there are a few things you can do

For financial planners, there are a variety of ways to ensure that you find a good one. Here are three of the most important. Taking these three easy steps won’t take much of your time at all and you’ll sleep much better knowing that you’ve done some homework to help yourself:

1. First, remember, this guy has your money you ought to know what he’s done in the past. You can know exactly what he’s done for the last 10 years by asking to see his Form U-4 or his Form ADV (ask for both parts of the ADV). Instead of asking, you can find out directly from the NASD at www.nasdr.com or by calling 800.289.9999 (or try the SEC at www.sec.gov).

If you see something on this form that you do not like (like a disciplinary action), do not immediately dismiss the professional. Remember that a financial planner may have hundreds of clients making thousands of transactions a year. Over the course of 10 years, the odds are there will be some type of mishap. Confront your prospective financial planner and ask about the particular incident(s). If you are not satisfied with the explanation, then move on to another planner.

2.There’s no substitute for experience. When you look over the form, you’d prefer to see that he’s been at this at least five years. This way he’s worked through at least a portion of a bull market and a bear market with real money on the line. So 28 might be a good minimum age – any younger, and you’re taking a risk, no matter how bright they seem

3.Hit ‘em with questions How many clients do you currently have? What’s your work history? And education? (Line it up with the ADV to see if the truth is being stretched.) Do you hold any financial planning designations like a CFP or a ChFC? What is your area of specialization? Who will work directly with me? What financial planning help do you propose now, five years from now, and so on. How are you paid for your services? What do you charge for different services? Etc.

The point is, get nosy. It is your money, after all. Another thing you can do is even ask to see another client’s statement that has similar objectives as yours to see how the advisor has done. The financial planner should easily be able to provide you with a statement with the client’s name marked out.

Help Yourself by  Taking These Three Steps

Most people will not bother to do these easy things. As a former broker, I can tell you, I talked to a ton of people, and only one or two asked for my Form ADV. I didn’t find it insulting on the contrary, I thought these people might be knowledgeable investors that may turn into good clients.

The best advice going forward is, after you’ve done all your homework and found people you like, you can’t just go to sleep You can’t just hand your life over to?financial planning advisors and tell them to “make it okay.” It means you’ll have to do a little homework (which, if you’re reading this, means you are helping yourself).

If you don’t even know where to start, here are two different financial planning advisors that I’ve known well for over 10 years Jeff Winn and Howard Goldstein. Jeff is one of my best friends I was the best man in his wedding. I trust him 100%. And Howard is like family in fact, my wonderful cousin Allison will most likely answer the phone if you call Here’s their contact information if you’re looking for financial planning help:

• Jeff Winn, International Assets, 800.432.4402 or 407.254.1522; e-mail: jwinn@iaac.com.
• Howard Goldstein & Samuel Jacobs, Peregrine Financial, 877.539.1004 or 407.539.1004; website: www.pfswp.com; email: hgoldstein@pfmail.com.

Good investing,

Steve

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