3 Lies We Believe When It Comes To Financial Planning

The world of financial planning is so incredibly diverse. And so it is with financial professionals, as well. The challenge that most people have is that by not being familiar with the various types of advisors; styles, approaches, licenses, abilities, qualifications, etc., it makes it hard to know what questions to ask in order to formulate an opinion as to whom to work with. People tend to go with their “gut feelings” about someone. And while that certainly can be an indicator as to what kind of working relationship one might have with a particular financial professional, it is equally, if not more, important to have objective information at hand for that decision-making time, as well.

There are a few questions that advisors rarely get asked, but should be asked. Sometimes these questions get avoided because the person asking might not even realize these questions are important. Past experiences drive many of the questions people ask. But if the goal is to be as informed as possible, it’s important not to forget to ask these three questions:

Question #1: Are you a fiduciary? And how do you get paid?

Not all financial professionals are fiduciaries. There are various types of securities registrations a financial professional can acquire; some are simply registrations to sell certain products, some are registrations to give advice (as opposed to just suitable recommendations for product sales). In other words, some financial professionals are “Registered Representatives (RR)” who are affiliated with a broker/dealer, with some securities registrations that allow them to sell products. While some financial professionals are “Investment Advisor Representatives (IAR)” who are affiliated with a Registered Investment Advisory firm, who have a few more/different registrations that allow them to be fiduciaries within the advisory services they offer their clients. Some professionals are both a Registered Representative and an Investment Advisor Representative. Others are not. Many consumers don’t know the differences. Below is a very basic breakdown.

Responsibilities to Client:

IARs – Fiduciaries. Are legally bound to do what is in the best interest of their clients…above all else.

RRs – Are responsible for making sure the products they sell to their clients are suitable.

Primary Responsibility/Function:

IARs – Primary responsibility is as an advisor to their clients

RRs – Sell securities and handle sales transactions for their clients

Compensation:

IARs – Generally charge a flat % fee for advice surrounding assets under management (AUM)

RRs – Tend to be commission based. They get paid commissions for products they sell.

Compliance and Regulations:

IARs – Are associated with Registered Investment Advisory (RIA) firms that are regulated by the SEC and/or state regulatory agencies.

RRs – Are regulated by FINRA (Financial Industry Regulatory Authority), along with the SEC and other state regulatory agencies.

Question #2: What is your particular expertise?

Not all financial professionals have niche markets….or only specific types of clients that they work with. But it’s important to know if they do. Understanding what kind of experience and typical clients the advisor has is important to understanding what to expect from them in regards to knowledge and experience that is relatable. Knowing what kind of team they have, and what kind of experience the team as a whole has is important. What do they specialize in? What resources do they have access to?

Here are some examples:

Tax efficiency with investments

Protection Planning – Estate planning collaboration

Small business owners

Multi-generational planning

Etc.

Question #3: What is your ongoing service model?

Taking the initial steps to get things organized and onboard with a financial advisor can be activity-filled and very important. But equally important is the clear communication about expectations for moving forward. Understanding what to expect between the advisor and client is critical to insuring that communication and expectations are being managed positively for the relationship, from both sides.

How often does the advisor reach out to clients?

Is there a team to support clients? Or just one individual?

What can be expected in regards to calls? Meetings? Paperwork? Statements?

What method of communication is used? Phone calls, meetings, email, video conferencing, etc.?

How accessible is the advisor if the client has a question?

These are just a few questions that might prove important to ask when interviewing financial professionals. There is no generic right or wrong answer. At the end of the day, it’s all about understanding what the relationship would be, the expectations for the relationship for both the client and the advisor, and communication. Being logical with interviewing an advisor is critical…look for proof and conviction between what they say they do vs. what they can prove they do.

Our financial well-being is critical for empowering our lives….we work hard for the life we want. And there are almost always some form of financial element to all we do. So please, don’t be afraid to ask the intrusive questions of the advisors you are considering working with. It could mean a great deal to how life gets funded….now and through all ages.

Many Americans spend more hours than they’d like managing necessary financial components of life while balancing caring for a family, performing at work and enjoying time with loved ones. Despite working hard to try to strike a perfect balance, financial planning, saving and investing can be tedious and time consuming, and maybe even daunting.

This is where a fiduciary comes in.

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What Is a Fiduciary?

The term fiduciary is thrown around in the financial services world, but few people truly understand it.

A fiduciary is a person or organization that acts on behalf of another person or persons, and puts their clients' interests ahead of their own. A fiduciary has a duty to act in good faith and serve clients by earning trust and confidence. Being a fiduciary thus requires being bound both legally and ethically to act in the client’s best interests.

To the Financial Advisors at Trilogy Financial, it’s more than that. Yes, we believe “fiduciary” means putting clients best interest before our own. However, we take it steps further to demonstrate with evidence that our proposals are in the client’s best interest. The evidence, be it in a financial planning concept or investment strategy, is the key to being a fiduciary.

Why Is It Essential To Work With a Fiduciary?

When a fiduciary presents evidence that their proposals are in the clients best interest, it leads to confidence. That confidence leads to good financial decisions over time. As Life Planners, that is what Trilogy’s Financial Advisors are working towards.

A fiduciary's main goal is to help set clients on an upright financial track through financial behavioral coaching, accountability and to help clients develop a Life Plan. A financial advisor and fiduciary will also help you prepare for retirement by maximizing the profitability of resources directed towards saving plans, develop estate plan strategies and more.

As Advisors, we anticipate individual’s or family’s needs over time, which allows us to be a better fiduciary. We believe a true fiduciary guides clients through life’s roughest patches and toughest situations.

Let a Fiduciary Be By Your Side When Life Planning

Let’s face it…a fiduciary can help ensure your financial goals are aligned in the same direction as your ambitions. Right? Proper financial planning requires objectification of your goals through the hands of an excellent financial partner who can help you with the following.

Help you save for retirement

For many, having $1 million worth of liquid cash and a list of profitable assets by the time they retire is a dream come true. However it’s a difficult dream to work towards for many Americans. That’s where a fiduciary comes in.

The secret to getting the retirement and lifestyle you dream is preparedness and time. The earlier you begin to save, the better. Beginning early allows you to make small contributions that will accumulate to a lump sum amount over a long period. For instance, if you start saving $5,000 every year from your mid-20s, by the time you are 40 years old, you will mostly likely have crossed a quarter a million mark. Remember, you will still be young, energetic, and even determined to save more. Because compounding is so powerful, if you continue saving the same amount by the time you are 65, you could be almost at $1.5 million, more than what you had intended to save.

In contrast, if you start saving at 35, even if you double that amount to $10,000, you may stagnate at $840,000 by the time you hit retirement age. So, the earlier you begin to save, the more you will receive at retirement. But do not be deterred if you are starting later in life. With the right planning, it’s never too late to achieve your goals. A Trilogy Financial Advisor can develop strategies to compound savings through investments and other growth opportunities.

Save for education stress-free

According to Market Watch, an average American will spend over $58,464 on their child's education from primary school to the undergraduate level, doubling the UK's average spend and tripling France's. Now imagine you are the head of a typical American family with more than 3 dependents; you will need almost $200,000 for education alone.  This is a huge dent in a family's finances. Fortunately, a fiduciary can help you save for education and college. Saving about a third of your earnings for a decade with the purpose of spending it on education will take the pressure of school fees off your shoulders.

Grow your wealth

The potential of growing your total net worth is an exciting process. Our Financial Advisors help you to navigate investment opportunities and mitigate risk, serving as guides as you work to grow your investments. At Trilogy Financial, we believe investing is about more than positive returns. Growing your wealth is a tool that can help you achieve financial freedom and live the life you’ve dreamed of. A fiduciary can coach you through building out the investment portfolio that aligns with your unique goals, and empower you to make the meaningful decisions to pursue your life dreams.

Plan your estate strategy

Due to the complex nature of estate planning, estate strategies should be tailored to your unique needs. And each strategy should aim to protect and preserve your assets for future generations.

Regardless of the value of the estate, a fiduciary will help you plan for the estate by:

• Ensuring your beneficiaries receive what you’ve planned for them after you pass
• Planning for lifetime gifts through trust and minimization of diminishing estate taxes
• Helping you to pass assets or a business to your younger generations
• Identifying powers of attorney to ensure your wishes come true

Trilogy Takes a Bold Financial Approach

For us, care is at the center of everything we do as fiduciaries.. We care about each client like they’re an extension of the family. Every day, with every piece of advice, we empower our clients to live wealthy. Ready to explore the benefits of working with a fiduciary? Review Trilogy's Financial Life Planning Tool to see some of the areas of focus we’d suggest on the path to financial freedom.

Bottom Line

A fiduciary helps you make critical financial decisions that are in your best interest, for your Life Plan. Our Financial Advisors work with clients nationwide. Regardless of your location, we have an office nearby or a virtual way to connect from the comfort of your home.

Start Life Planning today.

Fiduciary investment advisory services are only offered through Trilogy Capital (TC), a Registered Investment Advisor. TC markets advisory services under the name of Trilogy Financial (TF), an affiliated but separate legal entity. TC and TF are separate entities from LPL.