A recent Washington Post article has me fired up. The article highlighted how insurance lobbyists have managed to block new rules that would require financial planners to put their clients' needs first. Can you believe that? They’re fighting against rules that would protect people from getting bad advice. It’s frustrating, to say the least.
As someone who works with therapists in private practice, I’ve seen too many situations where therapists have followed financial advice that wasn't really in their best interest. It’s 2024, and I still can’t believe there are financial planners out there giving advice that benefits them more than their clients. But here we are.
Even though I’m an accountant, not a financial planner, I get to see the financial side of many decisions practice owners make. And sadly, I’ve seen my fair share of sketchy financial advice from so-called “experts.”
If you’re working with a financial planner (and you definitely should) or considering one, it’s crucial to ask some tough questions to make sure the advice you’re getting is actually in your best interest. I’ve seen too many therapists end up with complex, expensive products like whole life insurance, cash-balance plans, and annuities. These don’t always make sense for them, but they sure make a lot of money for the advisor. You deserve better than that!
Here are some must-ask questions to avoid getting stuck with something that benefits your planner more than it helps you:
What other options are out there?
If your financial planner is pushing one specific product without showing you other choices, that’s a red flag. They should be giving you a variety of options and explaining the pros and cons of each. Another big warning sign? If they’re offering products from just one company. That’s often a sign you’re dealing with an insurance agent rather than a financial planner. A true financial planner should be able to offer you multiple options across the board.
How do you get paid if I go with this product?
Don’t be afraid to ask! It’s your money, and you have every right to know if your advisor is making a hefty commission off of the product they’re recommending. If they’re not upfront about how they get paid, that’s a problem. I’m a huge fan of fee-only financial advisors because you know exactly how much you’ll pay, with no surprises. If you’re working with a traditional advisor, you’re likely paying a percentage each year based on the assets you have invested with them. Clarity is key here!
What happens to my money if I decide this isn’t the right product later on?
Some financial products come with big penalties and restrictions if you want to pull your money out early. Be sure you know all the fine print before signing on the dotted line. A good rule of thumb: If you change products a year or two down the line and you’d get zero money back because of hefty upfront fees, it’s probably not the best product for you.
Look Out for Your Financial Future
As a therapist, you work hard to help people every day, and your financial future should be just as secure. Don’t settle for advice from someone who isn’t putting you first. If your financial planner can’t answer these questions clearly, it might be time to rethink whether they’re the right fit for you.
At GreenOak Accounting, we don’t do financial planning, but we do work closely with therapists to help them understand the financial side of running a practice. Whether it’s taxes, compensation, or retirement planning, we’re here to make sure you have the info you need to make the best decisions for you.
So don’t be afraid to ask the tough questions—you’ve got a lot on your plate, and your financial planner should be making things easier, not harder.
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This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. GreenOak Accounting is an accounting firm that specializes in working with counselors and therapists in private practice. We provide monthly accounting & bookkeeping services, 1-time services and online courses. For more information on our specialized services for therapists please visit www.greenoakaccounting.com
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