Saturday, June 14, 2008

How one family found a financial planner

Here's the story of how one family found a financial planner they could trust.

More families, it seems, are seeking similar help. In 2006 the average revenue per financial advisory firm was $1.6 million, up from $632,000 in 2000, according to consulting firm Moss Adams. The Pierponts' experience shows how important it is to find the right fit. Like many couples, they relied on referrals and word of mouth to find a financial pro. But their first forays with money managers fell flat. A stockbroker friend of the family put them into some mutual funds, but their accounts were relatively small and they didn't get much attention from the broker. Gary blames himself as well: "I didn't have much of a game plan," he concedes.


Nor did he like the fact that some financial advisors are paid to push their company's products and services, which made Gary wonder whether they truly had his best interests at heart. Meanwhile, his mortgage business was starting to take off (this was around 2003, when the real estate bubble had begun to bulge), so issues like estate planning and capital gains were weighing on his mind.

Around that time he got another referral from a woman who worked at a title company that did a lot of business with Gary's firm. She told Gary about Kim Anderson at Baltimore-Washington Financial Advisors (BWFA), a fee-only advisory firm where all the counselors are certified financial planners or in the process of getting CFP certification, which takes about two years to complete.

Now, I disagree that using a financial planner is necessary, except for the most complex financial challenges, like trusts and estates. However, I'm happy to see in this case that the family chose a fee-only planner. That's my mantra on using a planner, he or she has to be fee-only.