Most everyone should have at least three advisors on their financial and estate management team: a Certified Financial Planner™, a Certified Public Accountant or tax preparer and an estate planning attorney.  Making a successful choice of who should fill each of these roles in your financial life requires more than going to the Yellow Pages.  Money Magazine has conducted trials of CPAs and tax preparers, in the past, by giving each of them the same set of facts and asking them to prepare an income tax return for the hypothetical client.  Money Magazine registered surprise when the results from each were substantially different, one from another.  The same would be true if you gave the same set of financial facts to a number of different CFP®s and asked them to prepare a financial plan.  I believe this, in fact, has been tried and proven true.  And, I am sure, if you gave a number of estate planning attorneys the same set of facts you would get as many different recommendations as there were attorneys in your test group.  The conclusion to be drawn from all of this is that financial and estate management is as much an art as it is a science; probably more of an art than a science.

Choosing a financial and estate planning advisory team is, therefore, much like choosing art – it is very much a matter of personal tastes.  Yes, credentials and experience and track record are important but there are a lot more folks to choose from, who rank high on any quantitative scale, than there are folks you will enjoy being with and in whom you will have confidence.  In my own case, I had clients who were with me for 30+ years and others who came to me based upon an enthusiastic referral from an existing client that I never saw again after the first appointment.    A number of my personal friends became clients but a greater percentage of my clients became personal friends.  You don’t choose personal advisors the way you choose friends.  In fact, you don’t choose friends so much as they just kind of develop into friends.  But you do need to choose personal advisors with the thought in the back of your mind, “Would I like to call this person a friend?”  Why is this the case?  Because you will live with this person through some difficult times: death, disability, loss of a job, loss of a loved one, divorces, marriages, severe market corrections, tax problems, et al.  Your relationship needs to survive all of these events with your faith and confidence in tact.

Therefore I would go about finding your personal advisors the same way you go found your friends.  You probably found your friends through other friends and/or as a result of your daily activities.  Who do you know already through church, service club, social clubs, etc. that are also Certified Financial Planners™, CPAs or estate planning attorneys?  You don’t know anyone that meets this requirement?  Ask your friends if they do.  Get the names of more than one and interview them.  If you already have an established relationship with one or more of these people I would ask them for referrals to those you need to fill out your financial management team.  Ask your CPA for a referral to a CFP® and/or estate planning attorney or the other way around.

Hopefully you now have the names of more than one person in each of the three advisory classifications: financial planner, accountant and estate planning attorney.  What should you do next?  First of all I would run their names through an internet check; “Google” them; to see if you learn anything interesting or anything that would eliminate them.  Next I would check with the professional and membership organizations that serve each of these advisory classifications.  For estate planning attorneys I would check the American Association of Estate Planning Attorneys (www.aaepa.com) and the Bar Association for your particular state; for CPAs I would check the American Institute of CPAs (www.aicpa.org); for CFP®s I would first check the CFP Board of Standards (www.cfp.net) and then check the Financial Planning Association (www.fpanet.org).  If you can’t find the person you have been referred to listed among those at the relevant website that should raise a red flag.  You might want to find out if the person has their own website and, if so, use the “contact us” tab to ask why you couldn’t find them at the relevant website.  The answer, if one is forth coming, should be enlightening.  If no answer, that is even more enlightening.  If they don’t have website call their office and raise this question with whoever answers the phone. 

I think it is important that a professional be involved in their professional societies.  They should be committed to helping their profession grow and prosper by serving the public good.  They can only do that by being active in their professional societies.  Attorneys must belong to their state bar association but they don’t have to belong to those organizations that foster and develop specialized areas of the law.  So an attorney who is also a member of the American Association of Estate Planning Attorneys has demonstrated a higher level of commitment to his or her profession.  CPAs who are active in their state CPA society have set themselves apart from those who are not.  Unfortunately there is no licensing for financial planners comparable to attorneys and accountants.  But there is quasi-public organization, the Certified Financial Planner Board of Standards, which issues the CFP® designation.  This organization owns the marks and can remove it from any individual if they are found in violation of their standards of practice.  This is why I think it is very important that you work with a financial planner that holds this designation.  Otherwise, you have no certainty that they are going to be held to any independently enforced standards of practice.  However, the CFP Board of Standards is not a professional society such as the AICPA.  So financial planners who want to work to grow and prosper their profession will belong to the Financial Planning Association as well as holding the CFP® marks.  That is why I would check out any financial planner you are thinking about “hiring” to advise you with both the CFP Board of Standards and the FPA.

Many of you will only use a CPA for the preparation of your income tax return.  You will have no need for the usual and customary services of a CPA such as auditing or the preparation of financial statements or bookkeeping.  If that is the case you may want to hire an Enrolled Agent rather than a CPA.  Enrolled Agents specialize in the preparation of income tax returns and are authorized to represent you (and appear for you) before the Internal Revenue Service; hence the term Enrolled Agent.  They are tested and enrolled by the IRS.  You can find and check out enrolled agents on the website for the National Association of Enrolled Agents (www.naea.org). 

Now that you have put together a list of names of professionals in your community that have been recommended by your friends or the other professionals you work with and you have check them out with the various professional organizations, it is time to meet with them face-to-face.  This is a critical meeting that will set the tone for your entire relationship with them.  You need to be prepared.  You need to be clear in your own mind why you are thinking about hiring the particular professional you are about to meet with.  There is usually a triggering event such as a tooth ache driving you to hire a dentist.  You might be looking for a CPA/tax preparer because you have been doing your own for a long time but it is getting more complicated every year or you got a letter from the IRS asking questions you can’t answer.  You might be looking for an attorney to do your wills because a close friend just died and didn’t have one and you have witnessed the mess his widow is facing.  Or you be looking for a financial planner because you have been offered an early retirement package or you have been managing your investments yourself have found out it is not as easy in a down market as it has been in an up market.  Whatever the reason be clear about it BUT be ready to respond when the person you are interviewing begins to ask questions that take afield from the narrow focus you may have had when you walked into this first meeting.

In fact this probably will happen and should happen.  After all you are seeking professional advice because of their trained perspective on the issues they deal with and it is undoubtedly broader than your perspective on the issue that has brought you in, in the first place.  However, the one thing that should override the whole of this first meeting is their interest in you as a person.  As I told all of my prospective clients in this first meeting, “I need to know three things.  I need to know where you are today, where you want to be tomorrow and what you are willing to do to get from here to there.”  The “willing to do” part required that I get to know my clients very well.  I needed to know what made them comfortable or nervous.  I needed to know what their tolerance for complexity was and their tolerance for risk.  I even need to know how they defined risk.  I needed to know how they made decisions.  I needed to know them very well.  This search for who they are started in the very first meeting.  When I am hiring a professional advisor I don’t want to know how smart he or she is (I have already checked out their credentials on the Web) but I do want to know how concerned they are about me.  I want to be aware of who is doing the most talking in this first meeting.  I want the prospective advisor to do more asking than telling.  I want to get the feeling that he or she is interested in me and I want my spouse to feel the same way when we leave.  Is the prospective advisor addressing all of his or her comments and questions just to one of us? When I leave that first interview I will be asking myself, “Did I feel comfortable and confident with so-and-so?”  “Can we become friends?”

If the answer to these last two question is yes, then I would hire him or her to be my advisor.  I would ask yourself these same two questions after each of your next few meetings.  But if you find yourself asking these questions well into the relationship then perhaps you have not truly become comfortable and confident with this advisor.  However, if your comfort and confidence continues to grow I would encourage you to give your advisor room for error.  We are all human and will make errors from time to time.  It is how we respond to and handle the errors we make is more important than whether we made an error.  As this is written (2009) we are still going through one of the worst economic downturns in our country’s history.  Errors we made.  They were made by everyone.  Changing advisors at this time, especially one that you have work with and have had confidence in for a long time, could be your most serious error. 

You will notice that I have not discussed such things as compensation and contractual terms.  Those are important but not as critical as forming a relationship with an advisor that you are comfortable with and confident in.  I will discuss these issues in another essay in this topic section.