4 Tips to Finding a Financial Planner (Houston)

These days, the first step to finding a financial planner is often typing in something like “financial planner Houston” into a Google search bar. While this practice may be a good start in drumming up the names of financial planners who operate in your area, there is much more that should be considered before making a decision. Once you create a list of potential advisors, you should research their credentials, experience and business practices, just to name a few.

Choosing a financial planner to work with is a very important decision – you’re picking the person who will protect your hard-earned money and your future plans – so making sure you make the right choice can be complicated, complex and may even feel overwhelming. This decision should not be taken lightly, so here are 4 tips that we've developed in nearly 50 years of helping families that will help make the process easier:

Tip: Get your responses in writing!

When interviewing a financial advisor, it’s important to ask about the investment management process and the parties involved. In many instances, one advisor makes investment decisions for their clients. This is common in the industry, but it can present some risks. How clearly is the advisor thinking if they have some stressful event in their life? What happens when they are on vacation and there is a significant market event? What if the advisor gets wrapped up in the latest investing fad?

We believe the risk of inconsistent decision-making is generally reduced if investment decisions are formulated by a committee, where a diverse collection of professionals can discuss, debate and reach decisions as a group. Linscomb & Williams is set up this way. The committee structure protects an investor from possible biases or conflicts of interests. Each advisor acts as a check and balance for the others.

Some firms, outsource their investment management. While this does remove the possibility of one bias, it’s important to note that this places the client one step further from the person who is managing his or her money. In these cases, investors typically don’t interact directly with the person or firm that manages their money, and the advisor may not necessarily enjoy such interaction on a frequent basis either.

These third-party investment managers may not know your individual goals or risk tolerance. They typically will not be aware of how your other assets are invested.

When you do get responses to these and other important questions, make sure you get them in writing. It’s easy to say something, but only those with proof can show you the answers in black-and-white.

 

Ready to discuss your financial future with a financial fiduciary? Contact Linscomb & Williams to see how we can help.

 

Tip: Look for a financial planner who is transparent about fees and expenses.

The financial service industry has layers and layers of fees, commissions and transaction charges. Some financial planners use outside money managers to handle the day-to-day investment of their clients’ accounts. Because this can subject clients to another layer of fees that doesn’t go to the financial planner, he or she may not offer up this information.

Be sure to ask about any additional expenses and how your financial planner will help minimize these for you. Even small percentages of hidden fees can have significant impacts over time on your retirement funds. You need to understand your "all in" fees.

Tip: Choose a financial planner who will keep you updated.

One of the top reasons people switch financial planners is because they feel they are not receiving responsive communication. Terminating a financial planner and finding someone new to work with can be costly and time-consuming.

To avoid this, it is critical that you ask questions about a prospective advisor’s plans to keep you informed.

  • What type of performance reporting will you get from your financial planner?
  • Will you have a team assigned to help you or will you just work with one person?
  • Will you have direct communication with the money managers handling your money?
  • How often and quickly can you have direct contact with the actual managers of your money?
  • Is your financial planner local? If you’re working with a financial planner Houston for example, can you stop by if you need to?

As the client, getting the right information communicated to you on a regular basis can help you sleep well at night and provide you with a peace of mind.

Tip: Don’t assume!

Assumptions are dangerous, particularly when it comes to your life savings. However, assumptions are made all the time. Here are 2 common mistakes investors make:

Assumption: My advisor is friendly and easy to talk to, so it must be a good fit.

The truth is many great investors are analytical thinkers. They may not be your first choice to invite to a party, but they make great decisions about your finances. Many salespeople on the other hand have great personalities, because that’s what they rely on to make a sale.

Remember Bernie Madoff? Part of his whole scheme was getting his clients to like him and recommend him based on his personality. Sadly, if many of his victims did a little bit of research, they could have saved themselves from a lot of financial and emotional devastation.

A friendly personality has nothing to do with competence, ethics, business practices or services.

Assumption: This financial planner worked for my friend and a family member, so he should be good enough for me too.

Be careful with referrals. Everyone’s needs, concerns and situations are different. What worked for one investor may not work for you. It’s important to ask an advisor about the concerns you have.

For example, your friend may not have dependents, while you do. A family member may not have an estate plan in place, yet that is at the top of your priority list. Another client may not have a divorce to consider, a business to think about or a pension to worry about.

Another factor to consider is people tend to remember the highs of their investments, but not the lows. And many won’t share the failures they experience; only the wins. Do your own homework!

Conclusion

Finding a financial planner in Houston (or anywhere, for that matter) is not an easy task. But given its importance to your future, you can’t afford to take a shortcut.

We talk to many clients who experienced a financial or retirement horror story simply because they chose the wrong financial planner to work with.

If you think you may be working with the wrong advisor or are starting your search for the first time, contact Linscomb & Williams to see how we can help.

 

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J. Harold Williams, CPA/PFS, CFP®

J. Harold Williams, CPA/PFS, CFP®

J. Harold Williams is Linscomb & Williams' Managing Director, Chief Executive Officer and Chairman.

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