How to put together an all-star financial team


Some investors may want professional help to navigate the tricky path to reaching their financial goals, but it’s not always easy to get started or figure out exactly what type of assistance they might need.

For example, there are many types of financial professionals, including financial advisers, traditional brokers, financial planners, accountants and lawyers. And each group has its own standards of conduct and regulators.

Of course, some do-it-yourself investors thrive on their own. However, others need professional advice, and perhaps someone to help protect against potentially costly investment mistakes.

Boston-based financial research firm DALBAR just released its 20th “Quantitative Analysis of Investor Behavior” and its findings make clear individual investors can be their own worst enemies. According to DALBAR, the average equity fund investor only earned 5.02% annually over the last 20 years ending in 2013. The Standard & Poor’s 500(SPX) returned 9.22% over the same period.

What to do? Investors have a better chance of avoiding common blunders if they have an all-star roster of financial pros behind them. Here are the key players:

Investment adviser

Registered investment advisers (RIAs) are held to stricter fiduciary obligations than traditional brokers. Some brokers are compensated by sales commissions when they sell products to clients. Although brokers are required to sell only products that are “suitable” for their clients, they have faced concerns over potential conflicts of interest. RIAs are obligated to put clients’ interests first and to fully disclose any potential conflicts of interest. RIAs typically charge fees for advice, or earn a certain percentage of assets under management.

Financial planner

A good financial planner can offer big picture advice on how to calculate insurance needs, manage cash flow, choose employee benefits and plan for retirement. Planners are typically compensated as a percentage of assets, on an hourly basis, or by charging a flat fee. By hiring a fee-only personal financial planner, you can be guaranteed the planner isn’t getting commissions for recommending specific products.

Insurance agent

Nobody likes to think of their own mortality. But individuals can’t have a secure financial future without adequate insurance coverage. Insurance policies come in all stripes, from term life to whole life to annuities with a guaranteed death benefit. Knowing which one is right for you takes expertise that a good agent can provide.

Tax adviser

Tax advisers help their clients navigate increasingly complex tax laws, prepare complete and accurate returns, and develop a strategic tax plan. Make sure your tax professional is a Certified Public Accountant (CPA) before hiring.


When it comes to estate planning or real estate transactions, a good attorney can be invaluable. Similarly, lawyers can help you get through life-altering events like bankruptcy and divorce. Warning: Attorneys typically charge by the hour and can be expensive.

Credit counselor

Credit counselors help consumers that run into debt trouble or want to avoid it with a smart spending plan. Good credit counselors advocate savings and smart consumerism. You should contact a credit counselor at the first sign that your debts are becoming unmanageable.

Bottom line: Pulling together this kind of firepower may help you avoid the conceptual traps all investors fall prey to from time to time. When it comes to managing your finances in a smart way, a deep bench of advisers can come in handy.

Photo credit: Kristy via Flickr Creative Commons.