Northeast Wisconsin - You Deserve Better Financial Advice!

Recently I have been thinking about writing posts designed to help you select a good financial advisor or financial planner. Today I wanted to go through the process I was of finding a few names to interview I was going to outline by using my location as an example to walk through.

Step One

After attempting the first step in the process (looking for independent financial planners on the NAPFA National Association of Personal Financial Advisors website), I had to stop. There were only two advisors listed in my immediate area! Expanding the search area to 100 miles added twelve more firms to the list. A 100 mile radius captures a great deal of Wisconsin...and only twelve NAPFA members. So, using the first filter I was going to suggest in this "Pick A Planner" post yielded only 14 potential firms to work with assuming you are willing to travel.

Northeast Wisconsin, you deserve better than that. I can't even write about my second step because the first step doesn't give you enough choice. Do I think you absolutely must work with a NAPFA member? No, I know you can get good advice outside NAPFA, although I do think it is the place to go for the highest probability of getting high quality financial advice. Nevertheless, let's look at an alternative...let's review the FPA (Financial Planning Association) website, searching for independent financial planners.

Step One (Second Attempt)

A search on that website using my zip code yields fifteen FPA members within twenty miles. A much better start than the two NAPFA yielded. Dig in a bit deeper, and only seven of the fifteen are independent. These seven advisors represented four unique firms. So, here we are on the second best option, and you only have four choices available to you. I believe you will struggle to find good financial advice and an advisor whom you feel comfortable with and offers the services you desire.

Why Is The Selection So Poor?

Why is this the case?  I think there are two reasons. First, citizens of Northeast Wisconsin, you continue to pay for financial advice through commissions instead of paying for the advice directly. It's a bad way to pay for advice. Until you demand that financial planners do better for you, there is no incentive to change. Advisors and planners are making plenty of money selling you products and giving you conflicted advice. The second reason falls squarely on planners and advisors. Not enough planners in the area have bothered to learn about alternative ways of delivering advice and better compensation models. This speaks to the quality of advice you are receiving, also.

So, Northeast Wisconsin, you may be happy with the advice you are getting. I don't think it's good enough, however. In fact, I suspect you are often overpaying and having advice under-delivered. You should expect and demand more.

For now, I can't write my post about how to select a financial planner for my local market.


Roger Wohlner, CFP® said...

Nathan I'm not surprised by your findings. I spent the past two days at a NAPFA Board of Director's meeting. One of my fellow Midwest Board members is an advisor in the Milwaukee area. He indicated that their local study group generally had four NAPFA members in attendence and that there were only about six members in the Milwaukee are, with a couple more in Racine and Kenosha. Your comments about the Fox Valley jives with my recollections about the area from my days as an undergrad at UW-Oshkosh. Like Milwaukee the Fox Valley area seems like "broker country." Growing up in Milwaukee I recall many prominent brokerage firms. It seemed like the financial services business in SE WI was very much the "good old boy country club" set. I think much of the fault lies with us in NAPFA. While we are small and mighty in out voice we still need to do more to get the fee-only message out there to the public. I am encourage by some of the initiatives in this vein that were discussed at our meetings.

Fern Alix LaRocca CFP® EA said...

Nathan, like Roger, I am not surprised. The difficulty in having a practice is that it is hard to serve the middle class when the infrastructure that is needed to practice is so costly. That makes a lot of fee-only advisors look toward the high net worth families and those families usually have a history with brokers. Will be hard (yet possible) to break that tradition.

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