How do I pay for advice?

I’m in flowchart mode this week. Here’s one I hope to use over, and over, and over again — how do I pay for financial advice?

Before that just a few considerations.

  • Do you need broad, general advice around the best ways to use your money?

This is basically the ideal case for hiring a fee-only financial advisor. I like to call it “highest & best use” — where is your money most useful for you?

  • Do you need specific advice around an issue or decision you’re facing right now?

This is a bit more difficult. No single planner or advisor (nor even a big firm) will have experience or knowledge in every area. Ensure that the advisor you’re choosing has seen your specific issue before, or at least has the resources behind her to steer you in the right direction.

  • Do you need an estate plan, a trust, or asset protection advice?

These are areas in which your advisor or planner needs to be coordinating with an attorney. There’s no getting around it — this is legal advice territory. Beware the non-attorney who claims to be an estate planning expert — often they are actually experts at selling insurance.

  • Do you need tax advice?

This one’s extra tough. In theory, your tax filer, CPA, and/or tax attorney should give you specific guidance on taxes. You’ll hear lots of brokerage houses say “we don’t give tax advice” because their compliance departments insist on that.

In reality, most planners & advisors have a serious and consequential impact on your tax picture, and they should absolutely be looking at your tax returns and speaking with your tax preparer (that’s you yourself, TurboTaxers). Tax advice needs to be coordinated, planned, and thought out ahead of time — not in April.

Enough stalling, here’s the flowchart. Yes, I see that typo too.

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You’ll notice none of these paths leads to “find a commissioned salesperson, agent, broker, or registered representative to source the right product for your needs". That’s not an accident.

Robinson Crawford