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  • Writer's pictureDavid H. Kinder, RFC®, ChFC®, CLU®

How do YOU evaluate the job other professionals do for you?

Updated: Jan 18, 2023

When was the last time you got all your various financial advisors in a room together to determine how well each of you was doing... in regards to YOUR total financial situation? Unless you have MILLIONS... you've never been able to do that. Why? Just too hard (and expensive) to coordinate.

So, you're often left to evaluate everyone yourself. Most of us believe we are smart shoppers, so we have certain criteria by which we evaluate other professionals. Investment advisor, stock broker, mutual fund picker: How much of a return did they get me this year when considering my risk tolerance? (If your performance was negative, how long would you let that continue before you make a change? That's how most people generally evaluate the effectiveness of their investment advisors.)

CPA, Accountant, Tax-Preparer: How much of a tax refund did you get me this year, especially compared to last year? Was it bigger or smaller? Did you account for ALL my eligible deductions? (If your refund is smaller, does that mean you'd change tax preparers? How long would you accept that situation?) Estate Planning Attorney: This is a little harder to judge, but I'll just call it the "happy meal" package. Did you get a will, trust, durable power of attorney, and medical directives all for "a good deal"? Was this to "check it off my list"? Or was there legal advice and strategy involved?

Life insurance agent: Did you get me a LOW COST policy to protect my family as cheaply as possible? After all, I just need this "just in case" I die... and I'm in "good health", so I should be cheap to insure, right?

The transaction mindset to financial planning may be the WORST part of your long-term financial planning strategy and avoids getting the advice you SHOULD be getting.

If you are working with the right kind of financial advisor, or as some would call a "macro-manager", it can help you understand how to coordinate the jobs that each of these professionals can and should be doing for you.

For example: If you believe, as most Americans do, that taxes will eventually be going up... and you take the steps to contribute to a tax-free retirement plan... that means that your taxes TODAY will be HIGHER than if you contributed to an IRS-Regulated retirement plan.

Your tax-preparer, (who doesn't want to lose a client), would advise you to open an IRA or contribute to your 401(k) because they want to help you get the best refund this year so you'd come back. They may not realize that you have decided to take a different approach and realize that your taxes will be higher this year... to avoid the "forever taxed" plan in the first place.

Your investment advisor, (ALSO doesn't want to lose a client), so they advise you to contribute as much as you can into their portfolios so they can make you more money. They may not understand that by using various life insurance policies, you actually are increasing your financial capacity to make non-portfolio investments that you can have greater control over for your future.

Your estate planning attorney, (while they may have a "package deal"), they want to help someone who is planning on doing well and may have additional needs for trusts and other legal work. The package may be helpful in bringing people in, but it isn't until a financial inventory is assessed to determine what other legal trust strategies that can work in order to lower, or possibly ELIMINATE taxes in one's total financial strategy.

The life insurance agent can protect your family with a low cost term policy, but that policy may not help you to actually grow your wealth. It may be what you THINK you want... until you are shown the true financial capacity and opportunities available with life insurance that aren't available with term policies.

But all of this requires a way of thinking that organizes, integrates, and coordinates what you really WANT for your financial planning... in such a way that also helps these other professionals be respected for what they do. So, if your taxes are a little higher this year because of the work we do... you'll know why and so will your tax preparer.

If your life insurance plan is much higher than a term policy, you'll know exactly why you chose to do that.

If you are not contributing to an IRS regulated retirement plan, you know exactly why you are making that newly educated financial decision.

Let these professionals do their jobs, but they are often looking out for you in THEIR way. You may need a "macro-manager" to look out for you in YOUR way and can see THEIR perspective as well. Notice their need and why they give the advice they give, but if you have your own reasons for doing what you do, you'll give more confidence back to these well-meaning and well-intentioned advisors.

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