Take a Quiz: Is Your Financial Advisor a “Broker” or a “Financial Planner”?

by Eve Kaplan, Certified Financial Planner (TM) Professional

You have a financial advisor, but what kind is he/she? Take this brief quiz to see if you can tell the difference between a “Broker” and a “Financial Planner.” Receive 2 points for all “Yes” answers, and 1 point for all “No” answers:

  1. My financial advisor has discussed my estate plans; he/she is in touch with my estate attorney:

Yes      No

  1. My financial advisor has all of my insurance information and has reviewed umbrella liability, long-term care, life and disability insurance with me:

Yes      No

  1. My financial advisor has a record of all of my investments, including 401k/403b/457 plans (and other investments he/she does not manage); investment strategies are reviewed for all my investments:

Yes    No

  1. My financial advisor works to minimize my taxes and boost savings; he/she is in contact with my CPA on an as-needed basis:

Yes   No

  1. My financial advisor has discussed my financial goals with me. I have an regularly updated financial plan that shows if I’m “on track” in terms of my financial strength:

Yes    No

  1. My financial advisor tells me exactly how he/she collects fees from me. I can see total fees as often as each quarter. My financial advisor doesn’t earn commissions on mutual funds, annuities or insurance:

Yes   No

  1. I feel comfortable telling my financial advisor about changes in my life that may (or may not) affect my financial health:

Yes   No

  1. My financial advisors is a Fiduciary – meaning he/she is obligated to put my interests before his/her interests at all times:

Yes   No

If you scored 16 points (“Yes” to all questions), congratulations! You’re working with a comprehensive financial planner – likely a Certified Financial Planner® — who’s in tune with your needs, charges in a transparent fashion and is a Fiduciary.  If you scored 12-14 points, you’re on the right track but you might be missing a full suite of services. If you scored 8-12 points, your advisor likely is a broker who manages your investments but can’t advise if you’re on track (or not) to achieve your goals and to avoid running out of money. Interestingly, it can cost LESS to engage a financial planner than a broker. To learn more about fee-only comprehensive financial planning, the www.napfa.org website has a wealth of information. NAPFA is the largest fee-only financial advisory organization in the U.S.