What Should You Be Telling Your Financial Planner?

Let’s face it, most of us have made a financial decision that we are not proud of. It happens to everyone. If you’re asking a financial planner for help, however, keeping secrets can prevent your planner from building an effective plan of action. Some of the most common things people may want to keep to themselves are things like credit card debt, medical issues, family members who may not be able to manage an inheritance, or an extra savings account tucked away at a different bank. In order for your advisor to create a comprehensive financial plan that is specific to your unique circumstances, you may need to share more information about yourself than you think. We interviewed our three Certified Financial PlannerTM professionals to get their thoughts on this topic.

Why is it important for clients to share everything from their financial life with you?

Juli: A financial plan is only as good as the information it is based on. Missing pieces could result in a different plan of action, so it’s important to share everything with your financial planner. The good news – I haven’t come across a client that has intentionally hid areas of their financial life…at least that I’ve discovered! Having said that, I know there have been times when clients have shared things they wouldn’t tell anyone else, like family disputes, addictions, poor financial choices, mounds of debt and more. I don’t shock easily.    

Gail: I would say it’s not just everything in their financial life that needs to be shared, it’s also sharing their past. As a financial planner I look through all financial documents such as employee benefits, insurance, investments, retirement, estate, and taxes. But I’m also asking about their lifestyle, how they handle market volatility, and why is a financial plan important to them. This type of questioning can also reveal past opportunities that have been previously overlooked.

Margaret: I view my client’s financial well-being as being nearly as important as their health. My role is to assess their whole picture and come up with a plan of action, regardless of their circumstances. I’m only able to do that when my clients are honest and willing to share all the information I need. Like Juli said, we’ve heard it all, and we’re here to help you figure out what’s best for your unique situation. We’re not here to judge.

How does knowing everything about a client’s financial life help you as a planner?

Gail: Knowing “everything” gives me all the pieces to the puzzle. From there, I can build an awesome picture of what the client’s future can look like based on their earning potential, money they have, and hard work. Tracking how the future unfolds can lead to reduced stress and feeling content.

Margaret: Financial planning is not an exact science. Sure, there’s plenty of numbers and calculations involved, but there’s a bit of an art form to getting all the right pieces to fit together. Sometimes, the art comes out of the details of a good conversation with a client and helps move what starts out as a fuzzy picture to a very clear high definition image. The devil is in the details.

Juli: Knowing everything also means we know exactly where we are starting from and using that information we can create a plan for where the client wants to go. As Gail said, when we have all the puzzle pieces, we can fit them together to address the client’s questions, concerns, and goals.

How do you give clients reassurance that you can help them work through their financial worry and challenges?

Juli: First and foremost, I approach each client and each situation without judgement. As we referenced earlier, as long as we have all the pieces, we can put the puzzle together and work through the challenges as we go. There’s rarely a 100% right or 100% wrong answer in financial planning, which means we can work through challenges. Many times, I can run scenarios to show a client how a particular challenge is going to affect their financial life. Once we put numbers to it, we can get a plan in place, which helps them not worry as much.

Gail: One step at a time. I have found clients that have a plan tend to stay focused on the cause. This helps them to ignore the media noise which changes daily.  Yes, it’s going to rain some days. Every day is not going to be sunny. But if you stick to the plan, the sunny days will outweigh the rainy days and you’ll reach your goal.

Margaret: As a planner, I expect interactions with each client to be different from the last and I love hearing my individual client’s stories. It’s part of what makes my job interesting. I enjoy giving my clients more confidence by helping them work through anything related to their financial life they find intimidating and coming up with a plan to tackle that challenge.

What steps can a prospective client take to find a financial planner they trust?

Gail: I find it’s best to start by clearing the field as much as possible. To do this, search for a “fee-only” (not fee-based) CERTIFIED FINANCIAL PLANNERTM. A fee-only financial planner is not compensated based on product sales. Instead, they are paid directly by you, the client. This way you’ll be sure the planner’s ethics are not compromised. Once your list is limited to two or three planners, set up interviews. Google “financial planner interview questions” and choose which questions are important to you. Take the list with you and make notes.

Margaret: You can also look for a CFP® professional via letsmakeaplan.org. Not all people who call themselves “financial planner” or “advisor” are certified. A CFP® professional has gone through an extensive education process, passed a rigorous exam, typically has years of experience under their belt, and is also required to act as a fiduciary, or in your best interest. After that, ask trusted friends and family for referrals or interview multiple people to get a feel for who you’re comfortable with. Make sure you understand the services they’ll provide before you sign a contract.

Juli: Gail and Margaret covered it, but in addition to understanding the services they will provide, make sure you understand how the planner gets paid and all fees involved. A fee-only planner should be straightforward but be sure to get all the details.

As you can see here, hiding things like debt or secret accounts from your advisor isn’t necessary. As a fiduciary, they are there to help you create a plan of action that’s in your best interest and move you toward financial independence. Giving them a complete picture allows for a more comprehensive and effective financial plan, customized to fit your situation.