March 15th!  Best known for the Ides of March, the due date of select business tax returns … and also this month’s newsletter.

Feeding off my newsletter last month where I went through the 5 questions you should be asking your tax advisor, I decided that this month should focus on your financial planner and advisor.  For some people this is the same person who does your taxes, for some, they are completely different.  From my experience though, it is best if you can have people who work hand in hand so that if you make decisions on your finances, you are prepared for what that will look like on your taxes.


Enjoy! And as always, if you have any questions or if something strikes you that you’d like more information on, please let me know.


5 Questions to Ask your Financial Planner / Advisor


1. Are you a fiduciary?


To understand this question, it is first important to understand what a Fiduciary actually is.  When you google the definition of a fiduciary it shows “involving trust, especially with regard to the relationship between a trustee and a beneficiary.”  A financial fiduciary has pledged to uphold the highest moral, ethical and fiduciary standards of service when providing advice to potential or existing clients. They work within a Code of Conduct which provides Good Faith, Care and Loyalty to our Clients Best Interests.

When you make the decision to work with a Certified Financial Fiduciary® you are making the decision to choose you.  Although all advisors can be good people and uphold moral and ethical standards in their business, they can still choose products which are suitable for you, but also potentially benefit them.  Those who become a Certified Financial Fiduciary® have made the pledge to choose you every time and in doing so pick what works best for you every time even if it is not best for them.


2. What is your process with clients? How do you ensure that you get to know me and then what happens next?


Before you start anything new, it is always important to ask the question “how will this work”.  When something new is going to impact you as extremely as a financial advisor does, this question should be enhanced and expanded upon.  How will they know who they are working with?  Will their recommendations be based on what you tell them or on questions that they ask you to dive deeper?  What if you forget to tell them something important, purely because you didn’t realize it was important at the time?


With these questions in mind, make sure when you choose to work with someone you know that they are going to spend a lot of time working with you and getting to know your ins and outs.  They should have a way of getting to know their clients and have questions they can ask which drive your memory or help you to stumble upon deeper concerns that you didn’t realize you had.


Even after the initial period of getting to know you, continuing to get updates is important as well.  Just because something was one way for your today, it doesn’t mean that these things can’t change in the far future, or even just a few months from now.  Understanding the now and the plan for moving forward helps you to stay in control of your relationship with the advisor and understand what what’s, how’s and why’s before they even occur.


3. What is the difference between independent advisors and ones who are contracted with a company or partnership?


When advisors start out in the business, they begin working with a company who can sponsor them to take the exams required to be a registered representative or an investment advisor representative.


When an advisor chooses to be independent, this means that they are not owned by any bank, insurance or product company.  Furthermore, this means that the advisor is not pressured to sell proprietary products, giving them the ability to create a plan which is strictly individualized to you.  There is a wide range of options available which can be directed in a way which suits you best.


For advisors who are contracted to work for a specific company, they are contracted to look at the products of the firm.  They can continue to work in a way which is in their client’s best interests, however will be within the realm of the products, funds and insurance products available to them.


4. Do you work within a comprehensive firm?

Each area of your finances is not mutually exclusive of each other.  Your investments impact your retirement, your estate, your insurance, and your taxes.  As you begin working with an advisor it is important to understand how you will be taken care of as a whole person.  It is important to get an understanding of how an advisor works with the people who are most important to you.  An advisor should be able and willing to work with or recommend to you a tax preparer for your tax preparation and review needs, banker for any debt or mortgage needs, attorney for your estate needs, or any of the many financial professionals who are important to you.

Additionally, it is equally important to get an understanding of how their firm functions in taking care of you.  Take time to understand what happens if your advisor is unavailable to speak with you at the moment or for a day or two.  Ensuring your trades can still be made, documents can still be processed, and phone calls can still be answered is another aspect of making sure your advisor runs a comprehensive firm. Get to know the advisor, as well as their staff, accessibility and other financial professionals working in the office of your advisor.


5. How do my taxes and financial assets work together?

This is an extremely important question and should be repeated at every meeting with your advisor.  When working on your finances, any slight adjustments, big changes or overall planning can begin to have an impact on the way that your taxes will look.  When you choose an advisor to work with, it is also important to know that they are aware of the impact that their actions can have on your taxes.  While not all advisors are also tax preparers, they should have some general knowledge of the tax return and how their actions will show up on them.

Taxes can be and should be a big part of the planning process both for your assets as they are now and how you would like for them to be in retirement.  Something as simple as selling a stock can create a large taxable gain, or even something more complex like a Roth conversion can affect your taxes now but improve your taxes in the future. 

Ensure your financial advisor is always willing to talk about the tax consequences of their actions, or to work with your CPA or tax preparer so that you are properly prepared for what is to come when filing your taxes for the year.

At Craig James Financial Services, we strive to meet or exceed all areas addressed in this newsletter.  If you want more information or guidance on choosing and working with a financial advisor or planner, please let me know!  I am happy to schedule a complimentary consultation to discuss any questions or concerns you may have.

Thank you, as always, for your time.