Financial Advisers

Finding the Right Financial Planner During a Recession

Navigating your way through a financial downturn takes resolve and know-how. Having the right person at your side during this touchy time could be critical.

The word “recession” itself is often panic inducing for many people, and it can lead to investors making snap decisions that can be detrimental to their financial health. Working with a financial planner during a bear market may help investors to feel more prepared and confident that they can weather anything that may come their way.

What’s the best way to find a financial planner during a potential recession?

1. Look for a fiduciary

A fiduciary has your best interest in mind over anything else —  if an adviser doesn’t have a fiduciary duty to you, they may recommend products that put more money into their own pockets, even if it isn’t the best thing for their client.

How can you tell if a financial planner is a fiduciary? If an adviser or firm is registered with the SEC or if they hold a CERTIFIED FINANCIAL PLANNER™ professional  designation, then they also are fiduciaries as both the SEC and CFP Board require fiduciary duty.

2. Check their credentials

If your potential adviser is a CFP ® certificant you can visit the CFP Board’s website to verify their credentials. You can also check an adviser or firm through the SEC website.

3. Know which type of adviser would work best for you

Are you looking for a fee-only adviser who charges a fee, either hourly or as a percentage of your assets that they manage? Or do you want to work with an adviser who earns commission on products? Keep in mind that any adviser who solely earns commissions cannot be a fiduciary.

You might also choose to work with an RIA, which is a company that provides fiduciary advice with several individual investment adviser representatives. Robo-advisors are often a place where you can manage your money, but they lack much of the insight and planning that you get with a human financial planner.

4. Delve into the details

Ask about account minimums, how they adviser will be paid, and the financial planning services that will be included.

Before you embark on a relationship that will be long-lasting with a financial planner, particularly during a potentially volatile market, you want a clear understanding of what you can expect and how the relationship will progress. Find out how often you’ll meet, when you’ll hear from them, how often you’ll be informed about changes in your portfolio and the market and whether they will collaborate with other members of your financial team, such as your accountant or attorney.

5. Ask questions that will help put your mind at ease

You want to be sure that your financial planner genuinely listens and cares about your situation, and that they understand your goals and wishes.

  • If you’re looking at a market downturn as an opportunity to potentially grow your assets, talk about that with any potential planner and ensure they understand your goals.
  • If you’re worried about your asset allocation, make sure you understand their processes for that during a downturn.
  • If you’re thinking ahead about your savings or having cash on hand, express those worries and see what answers you get.

Making sure that your planner listens to your specific needs and questions, and that they get back to you quickly with the proper care and concern is of the utmost importance.

Finding a financial planner during a recession isn’t much different than finding one any other time — you’ll want to prioritize finding a fiduciary who best fits your specific needs. Take time to ensure that you and your planner are a good fit, as the client/planner relationship should be long-lasting.

Your planner should be someone you can rely on when times are either tough or great.

About the Author

Andrew Rosen, CFP®, CEP

President, Partner and Financial Adviser, Diversified, LLC

In March 2010, Andrew Rosen joined Diversified, bringing with him nine years of financial industry experience.  As a financial planner, Andrew forges lifelong relationships with clients, coaching them through all stages of life. He has obtained his Series 6, 7 and 63, along with property/casualty and health/life insurance licenses. 

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