10 Questions Military Should Ask Before Hiring A Financial Planner

Do a quick Google Search on “Questions to ask your financial advisor” and you’ll find a page of articles. All have a slightly different focus depending on whether they emphasize planning like this one from the CFP Board, or investments likes one from Nerd Wallet, or some personal questions like this one from Dave Ramsey.  While good starting points, none focus on financial planning for military members and the unique benefits available to members.  With that in mind, here are 10 Questions Military Should Ask Before Hiring A Financial Planner.

1)  Will you have a fiduciary duty to me?

A fiduciary duty simply means that your advisor has a requirement to put your interests first with any of their recommendations.  This is critical because there may be situations where there are conflicts of interest between you and the advisor.  Having an advisor with a fiduciary duty doesn’t eliminate these conflicts, but it does require the advisor to disclose them to you and make recommendations that are best for you.

The fiduciary duty should encompass 100% of your relationship and you should get the advisor to commit to it in writing.

2)  What is your education, qualification and experience?

While investment advisors must be registered with either a state or federal regulator, there are minimal education qualifications to actually become an advisor.  To fill this void, numerous certification and education organizations have been established.  Several of the most popular designations are Certified Financial Planner (CFP®) and Chartered Financial Consultant (ChFC) on the planning side and Chartered Financial Analyst (CFA) on the investment side.  Additional designations can be found here (https://www.investopedia.com/articles/financialcareers/07/different_designations.asp)

Advisors should also explain their experience and education and how they keep current on changes within the planning industry.  The SEC also maintains disclosure forms (https://adviserinfo.sec.gov/) for all registered advisors where you can review this information.

3) What services do you offer?  Would you say you’re more finanical planning-focused or investment-focused?

Financial advisors typically offer financial planning and/or investment management.  Some may also offer insurance sales.  It is important you understand the specific services they can provide.  The best advisors want to understand your complete financial life to be able to provide the best recommendations and service.  See also questions 6 and 7.

4)  What type of clients do you typically work with?  How many military clients do you have?

Financial situations are unique for each client and can be very diverse.  Advisors who focus on a specific type of client can typically go deeper into situations that affect many of their clients.  While many advisors serve any type of client, many choose to develop specific expertise or a niche.  This could be college planning, stock options, blended families, military benefits or retirement income to name just a few.  If you have specific situations, be sure ask any advisors you interview how many clients they have with your specific situation.

5)  Do you understand military benefits?  Can you advise on the Thrift Savings Plan (TSP), Blended Retirement, Tricare, Survivor Benefit Planning, as well as lesser-known programs like the Savings Deposit Program during deployments?

Military benefits are similar to, but often slightly different than benefits for civilians.  Advisors who understand military benefits should be able to provide more tailored and nuanced understanding of how these programs operate.  If you participate in the TSP, they should understand the investment options.  They should know how Tricare works and what benefits you retain upon retirement.  Military-focused advisors should also be able to advise on some of the lesser-known benefits like the Savings Deposit Program deployed personnel can take utilize.

6) What is your approach to financial planning?

Comprehensive financial planning should look at your complete financial life as well as understand your goals and intentions for your resources (time, talent and treasure).  Comprehensive financial planning should typically cover insurance, tax, investment, retirement and estate planning areas that applicable to your situation.  Some planners will do this at the beginning of an engagement in a few meetings over 1-2 months while others may systematically work through all the areas over 6 months or up to a year.

7)  What is your approach to investment management or what is your investment philosophy?

There are probably almost as many ways to invest as there are investment advisors so understanding this is critically important.  If you don’t, there is a good chance you’ll decide to change strategies at exactly the wrong time.  Strategies can vary between short-term, actively traded investments to long-term, targeted asset allocations that will only be rebalanced every 6 months.  It’s also important to understand any fees associated with investment management as these can dramatically effect your overall investment returns.

8)  How do you get paid?

There are two primary ways you will pay for services: Fees or commissions.  Fee-only advisors typically have less conflict of interest than commission-based advisors (see question 1. Fiduciary duty).  Commission-based advisors typically sell some subset of financial projects that may or may not be the best way for you to achieve your goal.

Fee-only advisors usually charge on an hourly, project-based, flat-fee, subscription or retainer, or based on the assets under management (AUM).  Depending on the complexity of your situation, amount you intend to invest and income each of these may or may not make sense.

9)  How much do you charge?  What are my all-in costs?

Based on the services the advisor will provide and their fees how much will it cost you?  Additionally, understand how much the investment management and product fees will add to this bill or are they included.  Fees can vary widely, but it’s important to understand the value you’ll be getting for the money you pay.

10)  Have you been disciplined by a regulatory organization or have any complaints on your record?

Advisors are required to disclose infractions and complaints made against them.  It is always a good idea to check FINRA’s Broker Check (https://brokercheck.finra.org/) or the SEC’s Investment Advisor Public Disclosure (https://adviserinfo.sec.gov/) websites.  It’s important to understand that not all complaints or issues are major red flags, but any advisor should be able to explain the situation to your satisfaction.

Interested in how Next Mission Financial Planning answers these questions.  Check out the this post.