Avoid These Common Mistakes When Choosing a Financial Planner

By Trilogy Financial

February 20, 2024

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Introduction:

Selecting a qualified financial planner is crucial for securing a robust financial future. A proficient planner, like those at Trilogy Financial, can create a financial plan tailored to your unique needs to help you reach your goals. Yet, a staggering 74% of Americans engage in financial planning without professional guidance, revealing a potential gap in making informed choices².

Mistake 1: Overlooking Qualifications

Stat: Smart financial planning can yield 1.5% more in annual average returns, underlining the importance of qualified guidance³.
Tip: When choosing an advisor ensure your planner holds pertinent certifications and showcases a robust track record of expertise.

What are pertinent certifications for a financial planner?Pertinent certifications include the Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), and Certified Public Accountant (CPA) designations. These certifications indicate a high level of expertise and adherence to industry standards.
How can I verify a financial planner's certifications?You can verify a planner's certifications by checking the databases of certifying bodies like the CFP Board or the CFA Institute. Additionally, you can ask the planner for proof of certification.
What constitutes a robust track record of expertise?A strong track record includes many years of experience, successful financial planning, happy clients, and industry recognition or awards.
How can I assess a financial planner’s track record?You can assess a planner’s track record by reviewing client testimonials, checking for any industry awards or recognitions, and asking for references. Additionally, verifying their work history and experience in the field can provide insights into their expertise.

Mistake 2: Neglecting Fee Structures

Stat: According to a 2019 Financial Trust Survey, “Nearly half of Americans (48%) incorrectly believe all financial advisers have a legal obligation to act in clients’ best interests.”⁴.
Tip: Understand the fee structures and ensure transparency in your financial engagements if you chose to work with a financial advisor.

What are common fee structures in financial planning?Common fee structures include fee-only (fixed, hourly, or percentage of assets managed), commission-based, and fee-based (a combination of fees and commissions).
How can I ensure transparency in fee structures?Ask your financial planner for a clear, written explanation of all fees and charges, including any potential third-party fees, before engaging their services.
What is the difference between fee-only and fee-based financial planners?Fee-only planners charge a flat fee, hourly rate, or percentage of assets managed, and do not receive commissions from selling financial products. Fee-based planners, on the other hand, may charge fees and also receive commissions, which could potentially lead to conflicts of interest.
How do commissions affect the advice I receive?Commissions could potentially create a conflict of interest if a financial planner is incentivized to recommend certain products that earn them commissions, rather than what's in your best interest.

Mistake 3: Disregarding a Personalized Approach

Stat: A Bankrate 2019 survey shows that 44% of individuals with a personal finance plan save more for retirement and 43% save 50% more per month.⁵
Tip: When hiring a financial advisor opt for financial planners like those at Trilogy Financial, who prioritize a personalized approach to meet your unique financial objectives.

What does a personalized approach in financial planning entail?A personalized approach means that the financial planner takes the time to understand your individual financial circumstances, goals, risk tolerance, and future aspirations to craft a strategy tailored to meet your unique needs.
Why is a personalized approach important in financial planning?A personalized approach ensures that your financial plan is aligned with your goals and circumstances, which can lead to better financial outcomes and satisfaction over time.
What are some examples of unique financial objectives that would benefit from a personalized approach?Unique financial objectives could include planning for early retirement, saving for a child's education, managing a large inheritance, or preparing for a significant life change like marriage or starting a business.
How does a personalized approach compare to a one-size-fits-all approach in financial planning?A personalized approach provides tailored advice and strategies based on your individual circumstances, which can lead to more effective financial planning and better outcomes compared to a one-size-fits-all approach that may not align with your personal goals and risk tolerance.

Mistake 4: Ignoring a Comprehensive Service Offering

Stat: A whopping 90% of individuals achieved their savings goals owing to comprehensive personal finance plans, emphasizing the necessity of a holistic service offering⁶.
Tip: Choose a planner offering a spectrum of services including retirement planning, estate planning, and risk management.

Why is it important for a financial planner to offer a variety of services?A variety of services allows for a holistic approach to financial management, ensuring that all aspects of your financial life are considered and managed in a coordinated manner. This might include mutual funds, tax planning, and more.
What is retirement planning, and why is it crucial?Retirement planning involves preparing for life after you stop working, which includes saving, investing, and making other financial arrangements to ensure a comfortable living post-retirement.
What does estate planning entail?Estate planning involves the management and disposal of an individual's estate during their life and at and after death, while minimizing gift, estate, generation skipping transfer, and income tax.
What is risk management in the context of financial planning?Risk management in financial planning refers to the identification, assessment, and strategizing to mitigate or manage financial risks that could negatively impact your financial situation.

Mistake 5: Underestimating Continuous Communication

Stat: Clients report higher satisfaction levels with higher frequencies of investment-related educational communications and scheduled meetings, underscoring the importance of continuous communication 7.
Tip: Ensure your financial planner maintains open channels of communication, keeping you informed and engaged throughout your financial journey.

How can I ensure that my financial planner maintains open channels of communication?
You can set expectations for communication upfront, such as preferred methods of communication and frequency of updates. It's also helpful to choose a planner who is responsive and willing to engage in regular discussions about your financial plan.
Why is communication important in financial planning?
Communication is crucial to ensure that you and your financial planner are on the same page regarding your financial goals, risk tolerance, and any changes in your financial circumstances. It also helps in building trust and understanding throughout the financial planning process.
What are some red flags regarding communication with a financial planner?
Red flags could include lack of responsiveness, unwillingness to answer your questions, failure to provide clear explanations, or not initiating regular reviews and updates as agreed upon.
How can effective communication with a financial planner impact my financial journey?
Effective communication can lead to better understanding, trust, and alignment between you and your planner, which in turn can result in a more effective financial plan and a more satisfying financial journey.

Conclusion:

Avoiding these common pitfalls when choosing a financial planner can significantly steer your financial voyage towards success. Engaging with a reputable firm like Trilogy Financial not only helps sidestep these mistakes but also ensures a tailored, client-centric approach delivered by qualified professionals, fostering transparent communication throughout your financial journey1.

Insurance Services Provided by Trilogy Financial

Every Trilogy Financial Advisor is committed to helping you build the legacy you have always desired to leave through the following services:

Term Insurance

A term insurance policy is the most common form of temporary life insurance. The term usually lasts for a specific “term” of years. Term insurance is also a form of insurance that is rented. Meaning, you pay a monthly premium for the insurance, but it expires after the allotted time frame. The duration can range from five to thirty years.

Term insurance protects liabilities that will cease to exist after a specific period, such as providing extra cashflow for raising children. It is a simple life insurance plan that protects against the possibility of an untimely death. A death benefit is granted if the insured passes away during the policy's stated tenure.

Because death is unpredictable, term insurance plans are essential. The family may experience a significant financial loss if the family's primary provider passes away. A term plan covers the loss. It benefits the family, allowing them to cover lifestyle costs and continue to address their financial objectives.

Permanent Insurance

Permanent insurance can be considered “owning” insurance coverage. Like term insurance, you pay a monthly premium; however, in permanent insurance, the range is continuous and does not end within a time frame.

For instance, even after your children have moved out and your liabilities have diminished, you may continue to carry some form of insurance to cover your loved ones and compensate for your end-of-life needs.

Permanent insurance premiums are more significant than term insurance premiums because, unlike term insurance, the insurance company may never have to pay out the policy. Permanent insurance can be used as an income and an insurance tool. Both a death benefit and a cash value factor are included. You can access the money as the value increases by taking out a loan or a withdrawal, and you can terminate the insurance by withdrawing the cash value.

Long-Term Care Planning

Long-term care planning, at its foundation, entails ensuring that you or a loved one's needs are adequately met when they can no longer care for themselves. Therefore, as you age, having a practical plan becomes more and more crucial. While many maintain their independence well into their senior years, it never hurts to plan.

Any long-term financial plan should consider long-term care costs, especially if you are in your 50s or older. You are unlikely to qualify for long-term care insurance if you already have a disabling condition. Most over 75 applicants will not be accepted by long-term care insurance providers. Most persons who purchase long-term care insurance do so between 50 and 60.

Risk Management

Risk management entails recognizing, assessing and managing risk. A well-executed risk management program is built on a foundation of standardized risk assessments to assist businesses in prioritizing their risk based on its potential impact. This procedure will inevitably reveal hazards affecting the company's fundamental competencies.

As financial Advisors, it is a part of our job to help you navigate your financial well-being, which includes helping you mitigating certain risks. Identifying your risk factors is your first defense, followed by avoiding or limiting risks to your income and survivors. Insurance is your quality line of defense.

Importance of Insurance in Financial Planning

Here are some factors that make insurance an essential aspect of your Life Plan:

Financial assurance: You feel safe knowing that the insurance policy will cover the damages in the event of an emergency.
Tax advantages: Insurance lowers your taxable income and provides financial benefits.1
Risk protection: Insurance prepares you to deal with any financial loss you might suffer in the event of an unplanned circumstance.
Meeting your prerequisites: Several insurance policies are available to cover the various risks you can encounter.
Peace of mind: Insurance plans assure you that your funds will not be compromised in the event of an emergency.

*This information is not intended as authoritative guidance or tax advice. You should consult with your tax advisor for guidance on your specific situation.

Why Choose Trilogy Financial

Your financial plan should be strategically in line with your insurance. Our Trilogy Financial Advisors use a comprehensive strategy to offer insurance policies tailored to your specific needs and Life Plan. We understand the risks you face and how to help improve your financial life. Our Advisors will work with you to develop a deeper understanding of your alternatives, pinpoint practical needs and make plans for the care you and your family deserve.

To help you build the life you’ve dreamed, we collaborate with the most reliable insurance firms with a track record of being financial secure and capable of paying claims.

Get Started with a Financial Advisor Today

Everyone has a distinct level of risk, and before purchasing insurance, it is critical to identify risks and establish how to limit the likelihood of them occurring. We understand that everyone has a varying level of comfort and experience in navigating finances and Life Plans. That’s why our Advisors are committed to being both a partner and coach to support you as much or as little as you need, so you can make the best decisions for you and your family.

At Trilogy Financial, our Advisors will guide you through your daily financial decisions to keep you on track and set you up for your real-life goals. If you have any questions concerning insurance or any other element of your financial life, get in touch or visit our website today to book a meeting with an advisor

happily discussing insurance plan after meeting with financial advisor

Budgeting Advice Investments Advice

Goals: The Financial Benchmark that Matters

Rebecca DeSoto, CDFA®

March 12, 2018

Each of our lives is comprised of elements that create a story. Our financial lives are no different – the elements include our bank accounts, retirement accounts, mortgages, car loans, student loans, investment accounts, stock options at work, life insurance policies, credit cards, etc. When most people think of their financial life, they think of these elements but have trouble contextualizing them in their overall financial story. All of these elements are simply tools that either help or deter us from our goals. Before analyzing the tools, it’s important to understand why you’re using them and the goals and priorities that create the story which requires them.

One way people analyze these tools is by researching investment returns. Before delving into the world of returns, think about why you are investing in the first place. Your investments should reflect your overall financial priorities. If the risk tolerance in your investment appropriately reflects the time-frame you plan on needing the money, then worrying about investment returns day-to-day can be more of a headache than it’s worth. For example, if you are 35 years old saving for retirement at 60 – you should be aggressively invested if you’re comfortable with that. Because you have 25 years before you plan on using the money, short-term fluctuations in the market shouldn’t really concern you. In fact, if the market does go down and you are still contributing to your retirement, you are technically “buying on sale” – getting more shares for the same dollar value. Contributing to your retirement in up-and-down markets is called “dollar-cost-averaging” – meaning you average out the cost/share of an investment by contributing consistently rather than trying to time the market and invest when you are “buying low”.

There are many benchmarks in the financial industry to compare your investments to and track performance. Some examples include the S&P500 and the Dow Jones Industrial Average for large-cap stocks, the Barclays US Aggregate Bond Index for bonds, and the MSCI Index for international investments. It’s important to understand how your investments are doing in relation to the overall market – it keeps you abreast of what you are investing in and prompts questions you may not ask otherwise – such as what fees you are paying, who’s helping you decide what to invest in, and how much risk you’re taking on compared to the benchmarks you’re using as a comparison. However, the benchmark you should habitually pay more attention to than any other is your particular goal with each investment and your overall goals in terms of building wealth.

Focusing on investment returns only paints half of the picture when tracking progress because it is completely out of your control. If you can confidently say your investments are well diversified and invested according to a risk-tolerance you are comfortable with, there is a much more important benchmark to track than returns. Instead of relying on your investment vehicles to do all the heavy-lifting, you should use your investment behavior as the ultimate indicator to determine if you’re making progress or need more work. What are the financial goals you have in mind? To retire by 55? To save for a second down payment on a house? To pay off your mortgage? Help your children pay for their college tuition? Protect your investments and family in case of a long-term illness? Reduce credit cards and student loans? Build emergency savings?

When you are focused on goal-based financial planning, there are a lot of benchmarks to concern yourself with other than the hype involved in investment performance. Are you saving more this year than you were last year? Did you increase your savings rate when you received a raise? Does the money you are spending appropriately reflect the values and priorities that are most important to you? Are you using extra income to increase investments and decrease liabilities? By focusing on why you’re investing in the first place and the priorities that matter to you, it’s easier to ask the right questions and monitor progress. Once you know what you’re shooting for, a Decision Coach can help you understand the appropriate tools to get there.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.

The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. The MSCI EAFE Index consists of the following developed country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the UK.

Each index is an unmanaged index which cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.