The other day, I had the chance to speak with Kelly Campbell, CFP, about his book, Fire Your Broker. His book isn’t so much about getting rid of a broker altogether; it’s more about helping you find a financial planner that can help you with your overall wealth plan.
“Having a good wealth manager that understands your goals and dreams can help you build a plan around what you want,” Campbell said. He pointed out that many brokers just execute trades. They receive commissions and provide tips — on products that may be better for their pocketbooks than your long-term wealth.
“A fee-based financial planner, though, makes money based on how well you do financially,” Campbell said. “If your account value doubles, so does the financial planner’s pay. If your account value dips, so does the planner’s pay. An independent, fee-based financial planner has an interest in helping you reach your wealth potential.”
Fire Your Broker makes the same argument. The book is well organized, providing a clear case for choosing a financial planner, and the reasons for getting help with your financial management. He also makes a clear case against short-term stock picking in the book, and why it is important to think long-term in your planning and investing. One of the more interesting chapters in Fire Your Broker deals with account minimums.
Many fee-based financial planners have account minimums. Campbell argues that you should choose a planner with account minimums that reflect your account size. If you have a $500,000 account size, don’t go with a manager whose account minimum is $100,000. Choose an advisor with a higher account minimum — in the $300,000 to $500,000 range.
The book ends with a chapter on some of the dirty secrets of the financial industry, as well as a call to action for change in your financial life. It is an interesting and straightforward book, and one that can help you identify a good financial advisor. I found it an interesting read. While I’m not quite ready to go out and get a financial planner, I did find the book helpful.
At the close of our interview, Campbell offered these tips for choosing a financial planner or advisor:
- Choose a big picture person. “You want someone who looks at the whole picture, who goes beyond a broker giving soft tips and trading for you,” Campbell said.
- Consider someone who knows the basics of all aspects of financial planning. “If you get a CFP, you know you are getting someone who has had training in retirement, estate planning and college planning,” Campbell pointed out.
- Look at someone who understands diversity. “You have to realize that you can benefit from asset classes across the globe. … You’d think it silly to put 100% of your money in Japanese investments. But to the Japanese, it makes sense. Just as to us it makes sense to put everything in domestic investments. You have to think globally,” Cambell said.
- Find someone who is indepenedent. “You want a planner or a firm that does not represent any kind of investment or insurance company. You want someone with no personal stake in or bias toward certain products,” Campbell concluded.
Campbell recommends that you visit CFP.org or FINRA.org to research financial planners in your area, and to check for any violations or sanctions against planners. “Interestingly, before the whole thing blew up,” Campbell said, “there were red flags against Bernie Madoff. You really need to do your homework before you entrust your money with anyone.”