June 03, 2020
BDN Maine Latest News | Coronavirus | Bangor Metro | Anti-Racism Protests | Today's Paper

How to choose a financial planner.

At some point, almost everyone could benefit from financial advice from a trustworthy advisor. Having someone to turn to for life’s financial puzzles brings peace of mind to situations that can otherwise feel overwhelming.

Financial planning can address one-time events like graduations, marriages, divorce, starting a new family or receiving inheritances. But most often, financial planning is a process, and a good advisor helps you navigate twists and turns. The following considerations can help you find the right advisor for you.

The Right Fit:  Don’t underestimate the power of “goodness of fit” with your financial advisor. You want to feel comfortable and relaxed in conversation with your advisor. Financial terms can be downright confusing. Even worse, sometimes financial “rules of thumb” conflict with one another. A good advisor will be both your partner and coach in helping you filter out the noise, focus on your goals, and make savvy financial decisions.

Experience:  A truly experienced planner will feel comfortable sharing the details of their education and experience. How long have they been working in financial planning, investment advice, and financial services in general? What kind of credentials do they have? For example, many financial advisors have the Certified Financial Planner (CFP) designation. A CFP professional has completed education and experience requirements, and has passed a rigorous exam covering the essential elements of financial planning. CFP professionals must also satisfy continuing education requirements. There are many other credentials in financial services—be sure to ask what an advisor’s credentials mean.

Payment:  Your advisor should feel comfortable discussing their fees in simple terms. There are many ways financial advisors are paid, and it can be frustrating. Advisors can combine different types of fees, but they can usually be boiled down to four different types: commission, assets under management, retainer, and hourly.

Commission: Advisors who are paid by commission receive compensation through the investment products you purchase from them. The products may be mutual funds, annuities, or insurance. The commission rate can vary greatly, but is usually 3-5% for mutual funds. Commissions can be much higher on annuities and insurance products. The fee can be paid when you buy, when you sell, or can span a number of years of your investment ownership.

Assets Under Management: Assets under management advisors manage your investments for you and you pay them based on a percentage of those investments. A typical assets under management relationship charges 1% of assets per year. There is often a requirement that you have a minimum amount of investment assets before becoming a client. You check in with your advisor on a regular basis and whenever you need their advice.

Retainer: A retainer-based advisor sets a fee to be paid periodically – it could be monthly, quarterly, or annually. This advisor will typically base their fee on estimated hours, or on the complexity of your investments, or some combination of these. A retainer-based advisor may manage investments for you, or they may give you recommendations for you to implement.

Hourly: Hourly financial advisors charge you for the time they spend on your financial planning needs. Here in Maine, you can expect to see hourly rates of $200-$300 per hour. Hourly advisors can address wide-ranging questions and will provide specific recommendations for you to implement. You can check-in with an hourly advisor on a regular basis and as-needed, when life inevitably changes or throws a curveball.

Keeping these considerations in mind can uncover valuable details as your shop for a financial planner. Very likely, you’ll know when you’ve found the right fit.


SagePath Financial Planning, LLC is an independent, fee-only financial planning firm based in Bangor, Maine serving clients in Maine and North Carolina.


To see this special section as it appeared in print, click here.


Have feedback? Want to know more? Send us ideas for follow-up stories.

You may also like