Words of Wisdom

Wade Financial has teamed up with the National Association of Personal Financial Advisors (NAPFA), a professional organization for fee-only financial planners, to promote its efforts to help consumers make educated decisions regarding financial advisors. NAPFA members are fee-only planners that are held to fiduciary standards and must abide by the organization’s fiduciary oath. The organization is one of several for financial advisors that strives to create standards for the wealth management industry. For instance, to become a registered financial advisor through NAPFA, a person must have at least three years of financial planning experience, submit a comprehensive financial plan for peer review, and complete continuing education in six subjects every two years. Unlike medicine, law, accounting, and other professions, financial planners don’t have broadly accepted criteria for demonstrating superior quality, which makes it difficult for clients to know how to choose an advisor, according to NAPFA.

Primeau, a registered investment advisor, says he’s required to provide independent, objective advice to clients. He says that clients “know that you sit on the same side of the table as them, and that our advice is a means to solving a problem and we’re not selling products.”

There are a few other questions worth asking a financial advisor before you sign on the dotted line, according to Primeau: What’s it going to cost me if I want to get out? Am I able to get out of here without big surrender charges?

More than ever, investors want to know what’s happening with their money. “I think you’re going to see a lot more [financial advisors] moving to the [fee-only] side. They know that clients are going to have to start asking these questions,” Primeau says. “They’re going to want to have full disclosure. Think about what’s happened in the last three or four months. Petters has gone down and now [Bernard Madoff] out in New York. People want to know, ‘What’s going on in my accounts? What am I paying for? How do I get at my money?’ They’re going to be asking more and more and more about full disclosure.”

—Katie Harholdt