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Proceed with Caution: Evaluating Financial Planning Services


When it comes to money, today’s law students have a lot to think about. You’ll soon face a wide variety of financial concerns—including saving, investments, insurance, taxes, retirement, and estate planning. A qualified financial planning professional can assess every aspect of your financial life and help you develop a detailed strategy for meeting your financial goals. If you decide to hire a financial professional, take your time and choose carefully.

Before Hiring Anyone, Ask Specific Questions
Before you hire any financial professional, you should decide what services you are looking for. Ask about the services the planner provides, how much those services cost, and how the advisor or planner gets paid. It’s smart to ask:

  • What experience do you have with people in my circumstances? Do you have a particular area of specialization (student loans, investments, retirement planning, etc.)?
    What products and services do you offer?
    What licenses do you hold? Are you registered with the Securities and Exchange Commission (SEC), a state, or the Financial Industry Regulatory Authority (FINRA)?
    How are you paid for your services? What is your usual hourly rate, flat fee, or commission?
    Have you ever been disciplined by any government regulator or sued by a client?

Consider Compensation Models
There are two primary compensation models for financial professionals: “fee-only” and “commission-based.” Each model has strengths and weaknesses, so consider your personal goals and needs when deciding which fits you best. A planner may charge:

  • a percentage of the value of the assets they manage for a client;
    an hourly fee;
    a fixed fee;
    a commission on the financial products they sell; or
    some combination of the above.

Commission-based agents receive compensation based on the referral of a client’s business to specific products and transactions. Some commission-based agents may include planning services without additional charge or may require an additional fee for planning services. “Fee-only” agents do not accept compensation based on product sales. Before settling on a particular advisor, be sure you understand how he or she is paid.

Understand Licensing and Credentials
Financial professionals may have one or more professional designations or credentials. For example:

  • Certified Financial Planner (CFP)
    Registered Investment Advisor (RIA)
    Investment Advisor Representative (IAR)
    Chartered Retirement Planning Counselor (CRPC)
    Accredited Investment Fiduciary (AIF)

Learn more and compare professional designations on the FINRA website at… sionalDesignations/Designations Lookup.

If you have student loan debt, be aware that not all financial professionals have education and experience in managing complex student loan portfolios. If managing student debt is a priority for you, ask specifically about any prospective advisor’s knowledge of student loan repayment plans and forgiveness provisions.

Beware of Unscrupulous “Debt Relief” Companies
Begin learning about your student loans by speaking with your school’s financial aid office, reviewing information on loan consolidation, loan forgiveness, and repayment plans on, and contacting your student loan servicing company.

Watch out for companies claiming to provide debt relief charging fees for basic transactions that you can do yourself for free. For example, some companies charge upfront consolidation fees as high as $999 or 1 percent of the loan balance (whichever is higher); “enrollment” or “subscription” fees up to $600; or monthly account “maintenance” fees as high as $50 per month. Student loan borrowers can consolidate for free through (and consolidation isn’t even a good strategy for many of today’s law students).

Review Advisor’s Form ADV
Form ADV is the uniform registration form required by the SEC and state securities authorities. Form ADV contains key information about the advisor’s business and any disciplinary events as well as a narrative about the types of advisory services offered, the fee schedule, conflicts of interest, and the educational background of key advisory personnel. Filings are available on the SEC’s Investment Adviser Public Disclosure (IAPD) website.

Vol. 43 No. 4