Having a relationship with a financial professional is difficult for many people. After all, a true financial professional who is going to help you plan for retirement, maintain a comfortable lifestyle during retirement and establish good investment transfer to your estate will ask you to reveal the most intimate details of your personal financial situation.
These professionals will essentially know more about you than most of your family members.
Kelly Welker is a chartered retirement planning counselor with 16 years of experience in the financial industry. She is the managing partner of Renaissance Wealth Management Group of Texas, which offers securities and advisory services through LPL Financial, a registered investment advisor where Welker serves as the branch manager.
Welker holds an MBA and a certificate from the FINRA Institute at Wharton as a certified regulatory compliance professional.
Dealing with an independent financial consultant who works only on behalf of the client rather than the broker dealer can sometimes be a better experience for the client. Having a financial consultant with experience during market declines and low interest rates can also be helpful when planning for a long-term goal.
With all of the recent protests against Wall Street, many investors have come to rely on financial professionals who have no connections with traditional Wall Street firms or investment banking firms. Although some broker dealers have affiliation with Wall Street firms, most represent the investors of Main Street.
Investors are looking for advice on all of their investments, including real estate, bank accounts, mutual fund accounts, brokerage accounts, 401(k)s and sometimes debt they carry. Seasoned financial consultants who consistently plan with their clients will discuss all of these issues with them.
Getting rid of debt is a key issue for anyone considering retirement.
“You should never retire with a mortgage or any revolving debt hanging over your head,” Welker says. “It makes for a very uncomfortable lifestyle during declining markets or long periods of low interest rates.”
Investors are looking for a more balanced approach, with relationship being key with their advisor. Most of these relationships also encompass accounting professionals and legal professionals. Welker calls this “the three-legged stool.”
“It is imperative to have three separate legs on that stool,” she says. “Attorneys should check and balance what the accountant and financial consultant is doing for estate planning. Accountants should check and balance what the attorney and financial consultant are doing for tax planning. And finally, the financial consultant should be facilitating the accounts for proper estate transfer and tax friendliness according the plans set forth by the attorney and accountants.
“These three financial professionals should rarely act in the same capacity.”
Most independent financial consultants offer both brokerage accounts that clients pay transactional commissions and the option for fee-based planning. Clients usually have the option to choose how they want to pay their financial professional.
However, choosing a fee-based plan can often remove any conflict of interest from the equation.
“It puts the advisor on the same side of the table as the client,” Welker says. “The advisor gets paid based on the value of the account, so they have an incentive to keep working on the client’s behalf. If the account declines, they receive lower compensation.”
Keep in mind that there are many financial investments that can only be sold on a commission basis. That does not make them better or worse investments.
There are many financial problems investors may not know they have. It is the financial consultant’s job to determine how to solve those problems. Get good advice, and follow your instincts.
How do you know how to pick a good financial professional? Welker recommends getting referrals from people you trust.
She also recommends visiting www.sec.gov to check out registered investment advisors and www.finra.org/brokercheck to check out registered representatives of broker dealers. Both of these websites keep track of the work history and licensing of financial professionals. The websites also show you if there are any issues, legal or financial, that an advisor may have.
Be prepared to have dialogue with your financial professional about what you may find. What looks like an issue with the financial professional on paper may actually not be cause for concern.
Seek out good advice to deal with the ever-fluctuating market, and set up a good plan you can stick to. A good plan that can be followed may make that end goal much more attainable.
Kelly Welker hosts “The Money Maven,” a weekly local radio show on KLUP AM 930 every Saturday at 3 p.m. LPL Financial is a member of FINRA/SIPC. You may contact Welker at 210-581-5607 or www.rwmgtx.com.
