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7 Common Mistakes To Avoid When Choosing a Financial Planner

Are you working with a financial planner? Well, if you aren’t already, it’s not too late to get started. Working with a financial planner is an effective way to help you make wise investments with your hard-earned cash. But financial planners are human, too. So, while they can give you great advice, what happens to your money is still up to you, and you’re looking for finding the right financial planner.


In this article, we cover seven common mistakes that people make when choosing financial planners so that when you’re done reading, you’ll be aware of what not to do when making financial decisions.

What is a financial planner?

Financial planners are professionals who develop personalised plans using a holistic approach, leveraging knowledge and tools to help their clients achieve their financial goals for the future. For example, Solace financial planners can assist with but are not limited to, retirement planning and wealth management.

Is there a difference between a financial planner and an advisor?

Put simply, financial planners are professionals who specialise in a certain area of finance and work long-term with individuals and organisations to help them achieve their “big picture” with regard to finances. Financial advisors, on the other hand, have similar roles to financial planners in helping clients with a wider range of money-related tasks, which are generally shorter-term.

Mistakes to avoid when choosing your financial planner

​​Your financial planner should be a professional that you should be able to trust to help you achieve those big financial goals. However, this does not mean that you should choose the first one that someone recommends. You have a responsibility to ask questions and read over everything related to your money in order to make the best financial decisions.


In light of this, there are a few common mistakes that people make when choosing a financial planner and that you should try to avoid.

1.    Only relying on referrals

Another big mistake when choosing a financial planner is relying solely on referrals, as this generally leads to biased recommendations. You have the whole internet as a resource to help you find the best financial planners available; don’t limit yourself before you know exactly what’s out there.


Researching by looking at online reviews, credentials, and certifications will give you a good idea of what to look for in a financial planner. So, we’re not ruling out anyone you meet through referrals; we’re just saying to cast your net wide before settling because you don’t know better. You have resources; use them.


2.    Prioritising the relationship over your financial needs

Friendship and money don’t mix. Yes, there may be the odd occasion when dealing with your friends in a financial situation works out, but this is the exception, not the rule. As soon as you start prioritising your relationship with your financial planner over your financial needs and goals, you know you’re taking a risk with your money…and the relationship. Rather, you should opt for a financial planner who has a strictly professional relationship with you as a client; that way, when you need to make some decisions, there will be no personal feelings attached to your dealings with them.


3.    Focusing on outdated yield

The financial world is evolving faster than you can say “annualised rate of return”. You can’t just rely on a financial planner’s past yields as an indicator of their success. In fact, any yields older than 12 months should be disregarded. You need to consider the current market conditions and how they affect your long-term goals. You want to choose a financial planner who demonstrates consistency in their field.


4.    Overlooking expertise and specialisation

One of the major advantages of working with a financial planner is that they generally specialise and become experts in a particular area of finance. So, when you have a specific goal, like working towards retirement, then find a financial planner who specialises in retirement planning.


Financial planners may have a broad knowledge of different aspects of finance, but don’t overlook their expertise and assume they will be the best for all of your financial decisions – let them stick to their specialisation so they can tailor plans to those needs.


5.    Not asking the important questions

When meeting a financial planner, you need to be asking all the right questions. Be as thorough and specific as you can because, remember, they’re not doing you favours, but you’re bringing them your business. When asking questions, try to find out what their fee structure is, how they handle investments when there’s a crash in the market, what their investment philosophy is, and how often they provide updates on your investment portfolios.

Final Thoughts

When you’re looking for a financial planner, don’t just settle for the first person you find. Your goal is to find someone who will “see the big picture” and understand your goals as well as your current financial situation and use their expertise to help make your money work for you. By avoiding these five mistakes, you’ll have a good idea of what you want from a financial planner and avoid making some expensive mistakes.