What Does Podcaster Carey Nieuwhof Mean By Independent Financial Planner?
One of my favorite things to do while I'm doing the dishes, out for a run, or driving in the car is to listen to podcasts and one of the ones I listen to most often is Carey Nieuwhof's Leadership Podcast. At the end of a recent podcast, Carey Nieuwhof offered what he called his “single best piece of financial advice for young leaders.” The pastor, speaker, leadership podcaster, and best-selling author said that when he gets asked by leaders for financial advice, he always tells them to “hire an independent financial planner.” The three words that Carey Nieuwhof says are most important are “independent financial planner.” What does he mean?
The Problem With Financial Advisors
Nieuwhof described some of his experiences with financial advisors and what he didn’t like about them. He discussed meeting with investment advisors to help him save for retirement that helped him choose investments and investment instruments. While there’s nothing wrong with that, he felt that they had no plan other than to get him to invest as much as possible. After all, the more money you invest with them, the more money they make. He said that some had completely unrealistic ideas of what they needed to be saving and made them feel like they would never save enough.
His example that irked me the most was the guy who told him, “You know you need to give less.” While I understand how that advice aligns with some worldviews, it does not align with a biblical worldview. As Christians, we are called to give, even sacrificially. The world may not understand it, but generous giving should be a part of every Christian’s financial plan. That is one of the benefits of working with a planner that shares your values—they encourage your convictions instead of trying to change them.
Independent Planners Work For Their Clients
From what I heard in the podcast, it didn’t sound like Nieuwhof had any really bad experiences with financial advisors, the way Bernie Madoff’s clients did. However, they still left him unsatisfied and unsure of what to do. Sadly, much of our industry has that effect on people. That’s why you have poll results showing that 65% of people don’t trust the financial industry to do what’s in the best interest of its clients and articles on major websites like Investopedia titled, “6 Things Bad Financial Advisors Do.”
One of those six things that Investopedia cited bad advisors for was putting their interests before yours. There’s a reason that the financial industry has such low levels of trust. You see, people assume that financial advisors have to work in the best interest of their clients just the same way that doctors put their patients first and lawyers work for their clients. They are wrong.
In financial services, we don’t have the Hippocratic Oath, we have standards of care. One standard of care is the Suitability Standard, when an advisor must provide something that is suitable for a client. It doesn’t have to be the best or most efficient or most affordable, as long as it reasonably meets a client’s needs. The Suitability Standard applies to representatives of broker-dealers (Northwestern Mutual, Edward Jones, etc.) because they are legally obligated to work in the best interest of their employer, not those that they are providing advice to. They are not independent.
The other standard of care is the Fiduciary Standard. This is the standard that independent financial planners and registered investment advisors are always held to. It states that the advisor is legally required to put their clients’ interests above their own. They must avoid or disclose any conflicts of interest and make sure their advice is as thorough and accurate as possible. One of the reasons that I started Guide Financial Planning was so that I could be an independent financial planner, beholden to no one except my clients.
Financial Planners Develop Plans
In addition to recommending a professional that is independent, Carey Nieuwhof recommends working specifically with a financial planner, not just an advisor. What’s the difference? While there is no widely accepted definition of these two different jobs, first and foremost, a financial planner’s job is typically to create a plan. Many planners, myself included, offer other services such as investment management. However, the foundation of everything we do is a financial plan.
Yogi Berra, the famous baseball player, once said, “If you don’t know where you are going you’ll end up someplace else.” Before you can start investing for retirement, you need to have a plan. Otherwise, how will you know how much to invest, where to invest it, or even if you need to be investing?
Before making any financial moves, you need to know which target you are aiming for. Nieuwhof shared that his financial planner started by asking about his goals and objectives. He asked about his desired lifestyle and what he wanted to accomplish. A financial plan is simply a document that maps out how to use your financial resources to get from where you are to where you want to be in life. My job as a financial planner is to get to know your unique priorities and goals and gather information about where you are right now. Then, I look at every area of your financial life, from cash flow to insurance and investing, to determine the best way to fit all of the pieces together to get you where you want to be in life. It is like putting together a puzzle where the finished product is a high-definition map.
Where To Find An Independent Financial Planner
Carey Nieuwhof says that his single best piece of financial advice for leaders is to “hire an independent financial planner” because of the way his planner provides him with peace of mind and even says that now he and his wife “just don’t argue.” (I’m sure he was just referring to financial arguments, right?) He admits, though, that such a financial planner is “very hard to find.” So where do you find them?
There are several great ways to find an independent financial planner, one of those being right here! We at Guide Financial Planning are independent financial planners and, like Nieuwhof's planner Mitch, we create comprehensive financial plans for people that they can take and implement on their own, no strings attached. Of course, some people like to have help following their plan so we also offer ongoing services and investment management, too. If you want to learn more about how we can help you follow Nieuwhof’s advice, you can schedule a free introductory call or check out our website.
I understand that we're not the right planners for everyone, so I’ll tell you some other places to find independent financial planners. If you’re looking for a Christian planner that shares your worldview and won’t pressure you to limit your generosity, check out the Christian Financial Advisors Network. All members of the network are independent planners and also CFP® professionals (meaning they’re highly trained) and most are Certified Kingdom Advisors, so they understand how the Bible applies to personal finance. To broaden your search, the XY Planning Network is made up of independent planners, though the services they offer vary. Carey Nieuwhof says that hiring an independent financial planner was game-changing for him and recommends that every leader do the same. So what are you waiting for?