Find the Right Financial Planner for You

0:04This week on the Saturday Personal Finance edition of Motley Fool Money, how to find the right financial planner for you.

0:21I'm Robert Brokamp, and while I suspect that most listeners to our show are partially or entirely do-it-yourselfers when it comes to managing their money, I also know that many of you would value an occasional independent assessment from a knowledgeable professional, and maybe even a comprehensive financial plan and ongoing relationship. This week, I speak with certified financial planner practitioner Hannah Moore about how to find the right pro for what you're looking for. We had a good long conversation, so we're going to devote this entire episode to the interview. Wally Fool was founded more than 30 years ago based on the belief that, well, with enough time and education, you can manage your own personal finances.

0:56And while we still believe that, we also acknowledge that not everyone has the time to learn how to become a do-it-yourself wealth manager, retirement planner, tax expert, estate planner, insurance aficionado. Plus, even if you are the CEO of your own personal finances, you might want to get an objective second opinion from an expert every once in a while just to make sure you're covering all the bases. Here to talk about how to find the right financial professional for you is Hannah Moore, the founder of Amplified Planning, the owner and principal financial planner at Guiding Wealth, The recipient of many awards, including Investopedia's Top 100 Financial Advisors in the Nation and Wealth Management's Innovator of the Year in 2024.

1:33She's also the creator of The Externship, an excellent summer program for aspiring financial planners and people who want to build their own financial plan. I was fortunate enough to be able to attend the program last summer, and registration for this summer's Externship opens April 1st. Hannah, welcome to the show. Yes, well, thank you so much for having me, Robert. Let's start with a little bit about you. How did you get into the financial services industry and what led you to start your own firm? Absolutely. So I was in college. I didn't even know that this career existed. I was going to go down a nonprofit management route, realized that wasn't where I wanted to end up.

2:09And I had taken an intro to personal finance class because I was just really interested in this stuff. And the professor recommended that I change my major. So that's kind of how that ship kind of got pointed in this direction. So I got an undergrad degree in it. And then when I was 22, I went out into the workforce and started working for a woman who was 68. Four years later, I ended up buying her practice, bought another small practice after that, and really kind of got thrown into this. And so I don't know that starting my own firm was ever kind of part of the plan, but I quickly adapted to that.

2:40That's the starting for how I got here today. When I got in the financial services industry, same thing. I worked for somebody else for a while, someone I knew was actually my high school English teacher's husband. And a great way to break into the industry, sort of be taken under someone's wing, especially at that young age. I was around the same age when I got into it. What's your general take on financial planning landscape nowadays? What are the primary choices out there? Oh, it's fascinating what's happening within the financial planning landscape. So I graduated in 2008. Great time to be entering into financial services.

3:11My first week starting that job with that woman, it was the week the market hit its low. And so I've always joked that with my clients, I just had the Midas touch. The market just keeps going up. Ever since I came around. But yeah, when I think about the financial services industry profession, however we kind of define that, it's going through a lot of transformation from 2009, certainly till today that I've seen in my career, and certainly more if we look even more mackerely. And it's largely transitioning more towards financial planning. And so I think a lot of kind of factors are at play with that.

3:41So I think clients' financial lives are more complicated. They're not just looking for that investment help. There's so much more that they're looking for. The finances for today are so much more confusing than they were 20 years ago, you know, and we can certainly dive more into that. So I think there's a lot of kind of this macro shift. And we're seeing lots of the large firms embrace this as well, realizing that they have to be leading with financial planning versus just that investment management. On the talking shop a little bit side of it, one of the things that's also been fascinating in our space is a lot of the midsize firms are getting bought up by these really big companies.

4:16And so what we're seeing on the landscape is we're seeing really, really large financial planning companies coming out and kind of emerging. And so we're seeing kind of this almost barbell of like more and more small folks are starting up. And then we have these really, really large firms that are just acquiring. So it's creating kind of an interesting dynamic within this space, especially as we're going to talk about kind of how folks can find a good financial planner. Yeah, it's something we've seen in the medical fields where private equity is buying a lot of small practices, and it's happening in the financial planning industry as well.

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5:55I have often said that finding the right financial professional really starts with being very clear about what you're looking for, right? You made the differentiation between investment management, but then financial planning, which is all that other stuff that doesn't necessarily, isn't just about your portfolio, but obviously related to your portfolio. But, you know, are you looking for the whole kit and caboodle? Or do you just want an analysis of maybe one aspect of your finances? Like, right, just to make sure my retirement planning is on track, for example. My impression is that most advisors are still looking to manage your assets and do the financial planning on the side.

6:30is that still mostly accurate and how hard is it to find someone who you could just pay by the hour or the project to do one aspect of your finances? Yeah so it's really interesting and you know from a business model standpoint having an asset center managed business model is an easier business to run than some of the hourly planning that that's out there right and I think that just makes sense right if you have that reoccurring revenue you can you can build systems around that and I think what we're seeing more I'll circle back to the hourly piece in a minute but I think what we're seeing more and more of is as folks are getting the investment management and they're having the AUM, they're leading with a financial planning and we're seeing that infiltrate their whole service offering.

7:10And so it's less of just people are just doing the investment management and that's all they're doing now. It's really they're doing the financial planning and the investment management is often how they're getting paid for that work. So we're seeing that more and more. So like certainly all the conferences and things I attend over the years, there's been a much more emphasis on how do we up-level what we're delivering to clients for kind of what you would say that AUM fee. So they're getting the financial planning as well as the investment management on that. So again, I think that's a trend that we're seeing.

7:39Certainly the firms that are retaining their clients, that's what they're doing. There's a pretty direct correlation from where assets are moving, like moving out of one firm into another based upon kind of what are those service offerings that they're having. And we'll see, you know, we talked about the externship, we talked to so many people who are coming into the space. They want to be doing more of that financial planning. So we're hearing it from clients. We're also hearing it from the professionals who are joining this field. Like there definitely is an emphasis on this financial planning piece.

8:08But coming back to how do you find somebody who's doing those hourly work? Like I said, it's a harder business model. I think it can be a very good business model. And so what I'm seeing is kind of the space for this is there are some companies that are set up to just do this work. And so those are going to be good options, where it's just really an hourly rate fee. To find a lot of those places, I mean, they're going to be on the Garrett Planning Network. They're going to be, you know, when you look up the hourly rates or hourly planning, those are going to be the firms that are going to pop up that are going to be, you know, showing up for that.

8:39The other piece I think is really interesting, especially, again, this is not like a blanket solution for everybody, but I mentioned how we're having this barbell in this field. What we're seeing is a lot of these folks who are working at some of these large financial planning firms who are great planners, who have 15, 20 years of experience, are leaving and starting their own firm. And they're often doing some of this hourly work as they're kind of building up their client base. And so there's a lot of real opportunity. Like if I was to go out right now to try to find somebody, that's kind of one really interesting profile that I would look for in a financial planner is somebody who has kind of the pedigree or who has the experience and just might have a newer firm that they're running.

9:20The other piece that I think is really interesting is, you know, so many people, we see it at our firm where people come and like, I just want to get a second opinion on my investments. And when we start looking at this whole picture, they need more help than just their investments. We're looking at like, you know, they have an estate plan that might be out of date. They're having, you know, we can see this huge tax situation that's emerging for them, or they might have other areas of their financial plan. So it's kind of like going to the doctor and saying, I need you to look at my elbow, but hey, there's all these other things that could potentially be wrong as well.

9:50So that's not always the case, but I do think that is one of the downsides of being like, hey, I just need this one thing looked at because oftentimes that one thing can lead you to be like, oh, there's other things that we need to look at as well. So I would just maybe put a little bit of caution on that of just being like, I just need this one thing reviewed when oftentimes that one thing is touching so many other things. And so getting that really holistic view can make a big difference. Yeah, ideally, that's one of the big benefits, right? You may think it's only this one thing, but you're going to uncover something that you weren't even thinking about.

10:22That's the benefit of working with someone who has been doing this for a while. Or one of my favorites is, I see this often, one kind of that CFO of the family, and then they're married to somebody else who might be like, wait, what are we talking about here? We see that oftentimes people coming in to get that second look, but also making sure that everybody on the team is on the same page as well. Yeah, exactly. And that's the way it is in my family. I handle most of the finances. My wife does the bill paying, but doesn't know much about anything else. But certainly as we get older, I have every expectation that we are going to form a relationship with a fee-only financial planner, because I want that professional second opinion, even though I generally know this stuff.

10:59But I also want to begin that relationship because if anything happens to me, she already has someone that she trusts ready waiting in the wings. Robert, I can't even tell you how many clients we have that fit that profile. This is so timely. I mean, we literally had somebody pass away on Saturday, like for one of our clients. And it was the same thing. Like, I want to work with a financial planner. So he was great. He knew all of his stuff. But it really was, I want to work with somebody so that when something happens to me, I know that my wife is going to be taken care of. And we get on both sides, too.

11:30Like we have some wives who come to us who's like, my husband doesn't know any of this. And that's why I'm going to go work with a financial planner. So it goes on both sides of those. But I think it's a huge, a huge piece that we see people working with with a financial planner. I mean, the client, I called her on Friday in the hospital doing all these things. And money was not on her mind. She was like, is there anything I need to worry about? I was like, nope, we got it all covered. You're going to be okay. I'll call you next week. And so just to have that relief that that's not a pressure on her life.

11:59And then we're going to walk with her every step of the way, you know, in the coming weeks and months. Which brings me to the next question, which is there are a lot of people out there who call themselves financial advisors, financial professionals. We at The Fool have long recommended that members look for fee-only financial planners who are fiduciaries. Is that still generally good advice or any other terms or credentials that people should be looking for? Yeah, I completely agree. I wish this space was easier to navigate. You know, I help a lot of people kind of getting into this space. And it's hard for career changers to navigate.

12:28Anybody coming into, this is the career that they want to navigate, much less for clients to be navigating. So, yeah, I completely agree. The CFP certification, that's the gold standard. It really is. What that does is that just proves to you that they have knowledge on all of the areas that could touch your finances. There's going to be various skill set between the CFP professionals, but you know that they've taken the test and they have some of that knowledge. And there's a lot of other designations and degrees and things that are out there, but that one really is just the highest standard that we're going to have.

13:00Like you said, asking if they're fiduciaries. And then this will show you if this is actually a requirement for them to do that. And there's so many like, what is a fiduciary? How do we define this? And that's where I think it really gets down to some of the more in-depth questions. Like if I was to go find a financial planner, I would really be asking about what is their process? Like, what does it look like? What are the documents that you're going to be looking at? Like, what are you going to be doing behind the scenes? Because what you don't want is to go and pay for somebody. And like, they're just going to go run your portfolio through an AI something or other and give you out that report.

13:32Like, what does that process actually look like? The good planners out there will be able to articulate that. And hopefully, it'll really connect with folks of looking at that, getting clarity on what is that true process. Because some firms are fiduciaries and only do investment management. and some, you know, do the full financial planning and every fiduciary. It's like there's a whole spectrum that's within there. And so I think just in the interview process, getting really clear on what is their process, what does it look like to work with them? You mentioned the Garrett Planning Network is a place to find some of these folks, founded by Cheryl Garrett, one of my personal heroes in the financial planning industry.

14:09She's amazing. Amazing. Any other places where people should look or maybe professionals they should talk to for referrals, anything like that? Yeah. So, you know, there's a number of directories. So there's like, if you're looking for fee only, right, because that kind of segments it down even more. So Garrett Planning is a big one. NAPF is a big one where you're going to kind of find that segment, if you will. And, you know, one of the other best recommendations is asking people in your network of who do they use, who do they like, who they trust, right? What does that look like, especially if your situation is similar to theirs?

14:41That's one of the things that we find often. We're looking for advice. I mean, we've got a number of clients who are like, I looked around, I was like, I want to be like them. And I just asked them who their financial planner was, right? Like there's a lot of that, was it birds of a feather? That matters, right? So that can be another way of doing it. And then you could fact check it, right? Like go back and be like, hey, do they meet these criteria? I will say there are some great planners who cannot call themselves fee-only because of where they're kind of affiliated with, but operate as fee-only planners.

15:09So that's, again, not to muddy the waters at all, but that's really where getting to the process. Are you going to be selling me product? If so, what does that look like? Really asking about that process can make a big difference. Yeah, and just to be clear about the fee only and how you're paid, right? Fee only means basically the money is coming from the client. Yeah. And it can be AUM, 1 % of your portfolio. It can be by the hour, by the project. Whereas the other folks, they could be fee-based or just purely commission, which I know people in the financial planning industry who do charge by the commission, and they're good people.

15:44But you always are always just curious, like, are you recommending the best thing for me or are you recommending the best thing that generates the biggest commission for you? I worked at a place before I started my RA where I was an advisor there. And so there are a lot of, you know, legacy clients that we had and all these different things that we didn't want to get out. So I couldn't call myself fee only. But you can still charge like a fee only. But again, it just depends. You have the ability to do it. Whereas where I'm at now, like, I can't sell commissions. I will get hammered on an audit if I do that.

16:16Like there's actual like implications for me if I do that. But yeah, no, I think that's spot on. It goes to this question of who can you trust? And like what you're saying, I mean, this field is like, it's hard because it is, this is such an intimate thing to be working with somebody's money and their finances. And knowing that you have somebody that you can trust, like that is the most important piece. Support for the show comes from Fundrise. For the past 70 years, there's been a room in finance most people couldn't enter. A room where you could have invested in some of the biggest names in tech, companies like Airbnb and Uber before their multi-billion dollar IPOs.

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17:27All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. This is a paid advertisement. You mentioned that when you talk to someone, you just ask about their process. And generally speaking, when you identify a prospective financial planner, they'll meet with you for a half hour or so just to make sure that you're both on the same page. And by the way, they're interviewing you as well because they want to know whether you're the type of client they want to work with. So, you know, you want to ask about the process. You want to ask how you're going to get paid.

17:55Any other questions people should ask or any red flags that people should be on the lookout for? Yeah, I'd say trust your instincts. This is going to be one, you know, and if you're in a relationship, make sure both people are there. And just be like, did it feel good? Like, you know how sometimes you're just like, ooh, something just is off. Like, trust that instinct. I think that's the first piece. You know, one thing that I also like to look at when I'm looking at, you know, financial planners and how do we vet people, I do think it's important that they're connected to some network, some group that they can connect with other advisors.

18:28You know, I've trained a lot of advisors and, you know, I've really seen how important it is that advisors get resources from other advisors and how important that network is. So if I was to go find a financial planner today for myself, I would want to see them involved with NAPFA, FPA, CFP board, something that I'm seeing that they're not just a lone wolf out there. I want to see that they're connected and that they have the resources because inevitably, whether it's you or somebody else, they're going to get cases where they're just like, what is going on with this? And they're going to need more resources.

19:00And to know that they have that network, it just really, I think it elevates that experience that it brings to clients. Just to clarify on a couple of the acronyms there, NAPFA is National Association of Personal Financial Advisors. FPA is the Financial Planning Association. and that basically means, you know, this is someone who really wants to keep learning about the industry. Same with the CFP designation. You know, this is someone who's taken the time to be like, I want to be at the top of my game. And then by the way, to be a CFP, you do need some experience, which you can get through the externship.

19:32So that's something to keep in mind if you're interested. And the other thing I've found most astounding about the externship when I participated is that there are so many people in the financial planning industry serving a particular area, right? It could be immigrants. It could be people with children with special needs. It could be people right before retirement. It could be people in retirement. So I guess that gets back to the whole finding like the birds of a feather flock together. You want to look for someone who has dealt with people in your situation because they know the type of things you're going through.

20:05Yep. Well, and I think this is really where like, this is where I hope, This is my aspiration for this field, right? That if somebody comes to me and they're like, oh, it's not like a fit for me, that I would know the person to send them to, right? Because you're absolutely right that there's so much nuance that goes into financial planning and the unique considerations that they have to have somebody who has experience in that. I mean, I'm a working mom with three small kids. I run two businesses. Like, there's a lot of nuance. And to be able to work with somebody who understands that is really, really powerful.

20:36Thoughts on finding and hiring the right financial professional? Finding the right person can make all of the difference. You know, if you're like, oh, my guy's fine. Like, it's fine. Yes, right? Like, I mean, you can go to the doctor and have a fine doctor, right? But if you go, like, there's so many great people out there, especially people who are starting out. I mean, we're training a lot of them right now. They're so impressive. But finding the right person for both, if you're married, you and your spouse can make such a difference. It can give you a level of confidence and peace of mind that, I mean, we hear from clients.

21:09They didn't know. They're like, oh, I didn't even know this could be this good. And so really just taking the time to find the right person can make a huge difference. And it really is worth kind of the energy and the work that it can take to find them. And if you don't get the right one, like, keep looking. Like, I promise you, there's some amazing, amazing planners out there who are honestly looking for clients and trying to figure out, like, why can't I find clients? Oftentimes, it is just kind of that matching up that needs to happen. Well, if any of this talk about financial planning has made you, dear podcast listener, think about it as a career, you're in luck because Hannah will be back for our April 11th episode to talk about the externships she offers at April 5 Planning and how to get started as a financial planner.