There are, quite literally, hundreds of thousands of companies who say they provide financial advice. Many call themselves financial planners.
Financial advisor and financial planner are terms used very loosely by advisors and their firms.
Sadly, many of these companies are little more than salespeople peddling proprietary products like insurance policies, high-cost mutual funds, and annuities.
Now, before those of you in the industry start hammering on me, let me say at the outset.
There are competent financial advisors at all companies. The problem with many is the sales culture that exists on many.
How do I know? For over twenty years, I was a financial advisor on some of these very companies.
The pressure to produce results (sales) comes from the company, and the pressure the advisors have on themselves to scratch out an income every month.
It’s a tough balance to keep. I believe most advisors get into the business to help people.
The problem comes when their bubble gets popped, and they find out how hard it is to make money doing that. To help people, you need clients.
For most advisors, acquiring clients is a grind. The dropout percentage in the financial advice business is among the highest in any industry.
Most who get into the business don’t make it.
Though many in the blogging community have a disdain for financial advisors, the vast majority of the rest of the populace wants and needs financial advice.
The problem – stories abound about people who have been burned by unscrupulous or incompetent financial advisors.
Hiring financial planners is a big decision. It’s one you need to get right. Not doing so can cost you – a lot.
Our team at The Money Mix set out to find a firm that checked most, if not all, of the boxes we think a person needs when they choose financial advisors.
That list includes the ability to help you analyze your personal financial situation, set your financial goals, get to know your values and what’s important to you. In the end, that’s important to help you create a financial plan.
We have found a company, Facet Wealth, who checks all of the boxes when it comes to financial planning.
What follows is a review of how we came to choose them and why we believe they are the right choice for anyone seeking financial advice.
Getting the Right Financial Advice
When the team at the Money Mix looked for a financial planning firm, we wanted the firm to meet several criteria:
- Independent – As we mentioned in the introduction, many firms operate in a sales culture. Our experience tells us that it is difficult to limit the conflicts of interest in those firms. We want a firm committed to putting their clients’ first; not just in what they say, but in how they operate
- Experience – We think knowledge and experience are essential when it comes to offering financial advice. We don’t mean to imply the firm has to have all veteran advisors who’ve been in the business twenty years or more. We want firm leadership to have industry experience. The best firms have a mentorship or apprentice type of program to train their younger advisors.
- Quality – There are industry designations that indicate an advisor’s commitment to a high standard of advice. The CFP® designation is the most accepted mark for those seeking comprehensive or general financial advice. That’s not to say an advisor has to be a CFP® to give good advice. It’s a standard we believe shows the seriousness of the firm and its advisors.
- Fee Structure – Financial advisor compensation is a vast area of debate in the media and the industry. There are several ways to pay for financial advice. Commissions, a percentage of assets under management, fees, and commissions, and fee-only are some of the ways advisors get paid. We believe the fairest and most easy to understand structure is the fee-only structure. That can be a flat fee or a monthly, quarterly, semi-annual, or annual fee.
When we looked at firms, these are the four major areas we emphasized.
Services a Planner Should Offer
We briefly listed the basics in the introduction. Now let’s get into some details.
A comprehensive financial plan should be just that. If that’s not what you want of need, then the planners should be able to offer situational planning.
Maybe you just want a second opinion on your investment portfolio. Maybe you want them to analyze whether it’s better to take a lump sum rather than income for your pension plan.
Good financial planning firms have a fee structure that allows them to do that at a reasonable fee. I’ll talk more about that shortly
Here is a list of the planning services we believe should be offered for a comprehensive plan.
- Free initial consultation
- Goal setting
- Cash flow and net worth analysis
- Retirement expense analysis
- Retirement income analysis
- Social Security analysis & recommendation
- Tax planning
- Life expectancy modeling
- Scenario modeling
- Retirement plan analysis (401(k), 403(b), 457, IRA, Roth, etc.)
- Investment account analysis and recommendations (asset placement)
- Detailed risk profile
- Portfolio Stress Testing
- Asset allocation recommendations
- Investment management
- Life insurance analysis and recommendations
- Health insurance analysis and recommendations
- Property and liability insurance analysis and recommendations
- Estate planning analysis & recommendations
- Implementation plan
- Unlimited meetings (in person, phone, virtual, etc.)
Our Recommended Firm – Facet Wealth
Facet Wealth is our top choice for a financial planning firm. We met them through another blogger in our network. We were very impressed from our first meeting.
Based in Baltimore, MD, Facet Wealth operates in all fifty states. Clients of Facet Wealth get a dedicated CFP® as their financial advisor.
Other firms often have a senior advisor start the plan with a junior advisor, or a client services person takes over the account. At Facet, you have a dedicated relationship with the same planner from the start. That’s a big plus right out of the gate.
When we put them under our review process, they checked off all the boxes we looked for and many more. Let’s see how they stack up with our criteria.
Facet is not part of a broker-dealer. They are an independent registered investment advisor. When working with their clients, they act as fiduciaries. The fiduciary standard is the highest of legal standards. From the Facet website:
“A fiduciary is a person who holds a legal and ethical relationship of trust with clients. They are legally bound to make recommendations in the best interest of those clients.”
Though nothing is foolproof, the fiduciary standard offers better protection than the lesser suitability standard. To be clear, one can get bad advice from an advisor who is a fiduciary, and sound advice from someone operating under the suitability standard.
However, a firm that chooses to work under the fiduciary standard offers clients advisors who are less likely to have conflicts of interest inherent in non-fiduciary firms.
We think your best chance for success is with an advisory firm committed to acting in your best interest, not just in what they say. Taking on the fiduciary standard is as good a way as we know to do that.
Facet’s management team has decades of experience in the financial advice and technology industries.
The combination of the two sectors puts them ahead of many of their competitors. It allows their advisors to work virtually with clients across the country.
CEO Anders Jones and Executive Chairman Patrick McKenna are both experienced entrepreneurs and early-stage tech investors.
Their expertise and raising money and managing growing companies has allowed Facet to get funding early on in their development that most firms wait for years to get.
In 2018, they raised $33 million from firms like Warburg Pincus Private Equity and venture capital investor Slow Ventures. Investment of this size this early in a company’s development speaks volumes about the confidence in what they’re trying to build.
That speaks volumes about their reputation.
All of the financial advisors on the Facet team are CFP® professionals. Everyone who becomes a client of Facet works with their own CFP®.
Other firms often have a senior advisor start the plan with a junior advisor, or a client services person takes over the account. At Facet, you have a dedicated relationship with the same planner from the start.
All meetings are virtual, either via videoconference or via telephone. The initial consultation is designed to determine immediate goals, understand the financial landscape, and place clients with the right advisor. Once the advisor is selected, the client meets with them going forward.
The planning process is well designed and thorough. Here’s a short video to guide you through the planning process.
Facet charges fees based on the services their clients need. You only pay for what you use. The more extensive the need, the higher the fee. Conversely, those with limited planning needs pay a lower price. Facet does not charge based on assets a client has to manage.
They believe that eliminates too many clients who might need help. Clients who are just starting, or are growing their wealth and don’t have a significant portfolio often get ignored by firms who charge base on an AUM fee.
To avoid excluding anyone with planning needs, Facet charges a subscription-based fee ranging from $500 to $5,000 a year based on the complexity of the services offered. It’s a transparent, straightforward fee structure that is fair and reasonable for everyone.
The process starts with the welcome packet. It is designed to make sure you understand their fiduciary role, how they work with their clients, and what to expect.
In that packet is login information to go online and complete a questionnaire. The results of that determine the needs and fees based on the services needed to accomplish those goals.
The Facet team determines who the best planner for you is based on all of that information.
Facet Wealth Clients
Facet works with four types of clients.
- Young professionals
- Young families
- Approaching retirement
Their website describes each client group. They also realize that not everyone is a fit for their firm. If a client doesn’t think Facet can do an excellent job for them, they won’t pay a fee.
It’s an open, fair, and transparent process we believe sets them apart from their competitors.
The first step in the process is to talk to one of their Certified Financial Planners. Don’t worry. The call is not a sales call.
The time spent will be to get to know you, what you’re looking to accomplish, and determine whether they can help you.
I know that sounds too good to be true. But in this case, it is true. That’s why we have no problem recommending the team at Facet Wealth for your planning needs.
At The Money Mix, we understand how hard it is to find someone that offers competent financial advice at a fair price. We also know that the industry has a well-earned bad reputation. Those horror stories keep people from getting the help they need.
But the industry is changing. Competition from robo advisors and low-cost providers like Vanguard have forced much-needed changes in the industry.
Facet Wealth simplifies the financial planning process and offers its services at a fair and reasonable price. There are no hidden costs.
It doesn’t matter how much money you do or don’t have. Facet is in the business to offer financial planning to anyone who wants it.
Though other firms have CFP® Professionals in their firms, every client of Facet Wealth has their own dedicated CFP® from the beginning of the relationship. That is a unique and significant benefit to working with Facet.
This post originally appeared on The Money Mix and is being republished with permission.