CommonLounge Archive

Seeking Professional Advice

March 21, 2018

When you have been disciplined about your finances and have started saving a healthy amount of money, there will be a time when you should consider hiring professionals to help you as your wealth grows.

There will be benefits to having professional expertise available to protect your wealth, grow it further, and keep as much of it for you and your family as possible. Let’s talk about the types of professionals to consider hiring when to hire them, and how.

Professionals to Consider

An Accountant

Accountants have the expertise you need to save money on taxes and keep you prepared in case of an audit. With the recent changes that go into effect for 2018, you will feel more confident managing the tax changes with the help of an accountant.

Here are some items that may make you consider using an accountant:

  • You plan to sell a large taxable investment. If possible, it is best to plan for large tax events. An accountant can help you find ways to offset potential gains with losses that you may have available, and this would minimize the taxes due when you sell your investment.
  • You will open, run, or sell a business. Business taxes are complicated and depending on the entity structure, business activity may impact your taxes as well. Accountants can help with both business and individual taxes, as well as maintaining the company books on a regular basis.
  • You own, will own, or plan to sell real estate. There are rules around rental income and deductions available to you. Your accountant can help you make the best decision about owning real estate and how to sell the property to avoid a large tax bill.
  • You want to start gifting from your estate, and you are unsure how to do that best. An accountant can help you file out the proper forms required each year when you gift and transfer assets from your estate.
  • You know you can itemize your deductions but are too confused how much you can allot to each category, especially if you also have multiple income streams.

Accountants have varying levels of experience but looking for one that is a CPA, Certified Public Accountant, and has at least 5 years of private sector (taxes for individuals) experience is ideal. Accountants will specialize, therefore you should look for one that will meet your needs, such as business planning or international accounting.

Accountants can take quite a load off your shoulders, but you must be sure you are hiring the best. Mistakes can be costly, and your return could become flagged for an audit. Below we will go over questions you should ask when hiring a professional. You should also be prepared to spend the money needed to hire a good professional. Tax professional services are a deductible expense, but they will set you back $250 or more for straightforward returns to over$1,000 for more complex individual and business returns.

Financial Advisor

When your investable assets, outside of your company retirement plan, have exceeded $100,000 and your consumer debt is next to zero, it is time to consider a financial advisor. This threshold might be lower for you if your income is growing quickly or you are successfully self-employed.

Many financial advisors can create formal financial plans to help plan for retirement, education savings, and offer strategies for risk management like purchasing insurance. All the goals you want to develop a strategy for will go into a single financial plan. The plan may also include a budget or net worth statement and is designed to give you a complete snapshot of your finances at a specified point in time. It is a good idea to get a financial plan completed if you are 5-10 years from retirement, newly married, or starting a family. You can expect a financial plan to cost as little as $250 to over$1,000 for a more complex situation. A professional can help guide you through big life decision and help you select the right investments for you and your family.

Understand that there is a difference between a broker and a financial advisor. A broker is employed by a brokerage firm and will collect a commission based on trades they place on your behalf or on other products and services sold through their firm. A financial advisor is more of a support professional for you who is there to ask questions throughout the year and who will make investment recommendations in addition to reviewing your portfolio and goals on a regular basis.

Financial advisors may have a variety of designations with the most well known being the CFP, Certified Financial Planner, designation. Others may include:

  • CFA - Chartered Financial Analyst
  • ChFC - Chartered Financial Consultant
  • CLU - Chartered Life Underwriter
  • AIF - Accredited Investment Fiduciary

A financial advisor can charge you a percentage of the assets they manage on your behalf, a flat fee, or a combination of the two. The industry is frowning more on more on financial professionals that collect commissions on the investments they recommend but there may be a few who still do.

Investment Manager or Money Manager

An Investment manager may go by many other names as well, such as money manager or wealth manager. An investment manager is an expert in capital markets and security selection; like stocks, bonds, ETFs, or mutual funds. This type of expert will specialize in a particular area of the market and offer investors a product or vehicle for which they may invest.

One of the most well-known types of investment managers are those that run mutual funds. You may have heard of Vanguard, Fidelity Funds, SPDR ETFs, or iShares ETFs? There is a team of individuals assigned to a particular fund offered by the investment management firm and, as an example, the fund may select from only U.S. large-cap stocks that are in the technology sector. The team’s job is to analyze the stocks available in that universe and follow their stated strategy to select the ones they believe are best for the long-term.

When looking for the right investment manager, you should focus on their research expertise. A CFA, Chartered Financial Analyst, is a prestigious designation for an investment manager and indicates they are very knowledgeable in statistics, economics, and a wide range of security types they may select to use for their product.

There are hundreds of investment managers out there to choose, both big and small, and offering a wide variety of investment styles. It is a standard requirement to meet a minimum investment amount set by the manager. For mutual funds, it may be as little as $0, and for some more specialized products, there may be a$1,000,000 minimum. You can expect an asset-based fee to be charged by an investment manager, which means they charge an annual percentage of the assets they manage for you. For example, if you invest $10,000 it would be common for a large-cap mutual fund to charge 1.25% of your investment amount per year.

It requires a lot of studying and expertise to be able to select the best investment managers for your portfolio, and many individuals rely on the help of a financial advisor to do so. However, Morningstar is a well-known database of investment managers, and they have created tools for you to be able to search for the right manager based on your defined criteria. Their website,, will show you how to use the tools they offer and will give you suggestions on using the right selection criteria.

An Attorney

Attorneys are helpful in many parts of your financial life. They help with wills, business formation, patents, and for tax law, personal injury, or criminal services (hopefully you’ll never need them for this!) .

Attorneys will typically charge an hourly rate. However, some services may be a flat fee; such as simple wills or standard business formation. Hourly fees range from $150 per hour to$500 per hour and beyond, and will depend on a few different factors:

  • Community size – metropolitan area attorneys tend to charge more than rural attorneys
  • Experience - Attorneys will carry the J.D. designation after their name (Juris Doctor) letting you know they have a law degree. Many will start in public service before entering private practice and specializing in a type of law.
  • The reputation of the firm — well renowned firms will typically charge a lot more
  • Areas of specialty

It is common that an attorney may provide you a free initial consultation to assess your situation and allow you to become more familiar with their process. Usually, services are available as needed, and you will want to use their time wisely to avoid costly bills. Many find the legal process intimidating, but as with personal finance, the more education you have, the better off you will be.

The Search Process

When searching for professionals, it is recommended you interview two or three potential candidates before you agree to hire one. You wouldn’t likely hire the first person you interview at your place of business, so why would you do it for your personal life? Get referrals from respected friends who are doing well in life. It is likely they are doing well because smart people surround them.

Here are questions you should ask when interviewing:

  1. What is their experience and how long have they been practicing? Check their LinkedIn profile or search their website for more information on their background before meeting them. You want to be sure there is enough experience offered to deal with a variety of situations that may arise. Ask them about their successes and failures and what they have learned from them.
  2. Where are you licensed to practice and what licenses or credentials do you have? The three professionals mentioned above are all licensed by individual states and may be required to pass uniform exams. Ask what other credentials the may have to make them experts in the services you are seeking.
  3. How often will you meet with me? It is common for accountants and financial advisors to offer annual services for a fee. They typically will make themselves available for periodic reviews of your situation and will make recommendations on any adjustments that need to be made. Attorneys usually charge a fee per service needed or by the hour.
  4. What is your ideal client? You want to understand the type of client the professional is targeting because you want to know if you will be a priority for them. The more you fit the ideal client type, the more attention you will get, as opposed to a one-off special relationship that they are unlikely to maintain well.
  5. Tell me about the team that supports you? It is important to understand who you will be communicating with when you need help or have questions. Many times there are assistants or junior professionals that will work in a team with the person you hire.
  6. What are your fees? Understand thoroughly what fees will be charged, how often and by what means you will pay for them. While accountants and attorneys typically send you a bill, investment management has many forms of fee collection and one is for the fee to be withdrawn directly from your investment accounts. Ask lots of questions regarding fees, so you are sure you understand them. If you forget or don’t understand, ask again!
  7. What services are included in the fees? Make sure you are clear what you get for the fee that will be charged. Plan ahead for services that may be extra.
  8. Do they agree to act as a fiduciary? A fiduciary is someone who holds a position of trust and agrees to act in their client’s best interest and not the benefit of another person or entity. It should be stated in your contract that the professional is acting as a fiduciary and any conflicts of interest should be fully disclosed.
  9. What is your ideal form of communication? If you are someone who feels the best service is to receive a phone call, then you want to know if who you are hiring also feels that way. If they prefer to email, you will be very disappointed. Ask if they will send you newsletters or regular forms of communication to keep you posted on news or information that may be of interest to you.
  10. Do you have any past judgments or disciplinary actions?
  11. You can check the background of CPAs on
  12. You can check the background of financial advisors and investment managers on
  13. You can check the backgound of attorneys on the state bar’s website under Find An Attorney or Attorney Search. Here is the one for California, as an example.

Having a reliable expert on your side is a huge benefit to your future and your financial freedom. Don’t settle for poor customer service and mediocre results. These experts are part of your team and are there for you to rely on when you need them most. If they are not meeting your expectations, then find another expert.

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