AUSTIN, TX / ACCESSWIRE / December 23, 2020 / Originally from Seattle, Washington, Erin Hilton worked in the financial planning industry for over two decades.
She got her start working with Safeco Mutual Funds. Over the next few years, she obtained her Series 6, Series 63, and managed an investment center branch before moving to Hawaii where she landed a position with AIG VALIC, specifically managing 403b's for teachers. After obtaining her Series 7 and Series 65 Hilton relocated to Colorado, where she then became a CERTIFIED FINANCIAL PLANNER™. It was around this same time that she began to realize the dark side of the financial planning industry.
According to Hilton, "Financial planners don't necessarily always have bad intentions, but they often pick up habits from their manager or work within a company that pushes them to broker certain deals or push products that may not be in the best interest of the client."
Like many financial planners, Hilton was hopeful that congress would soon require financial advisors to act in the best interest of their clients. Unfortunately, in June, 2018, after decades of Congress fighting the large financial institutions who stand to lose trillions of dollars in excess fees they are charging their customers, the financial institutions won the battle and the rule was officially vacated. The Fiduciary Rule would have required retirement planners to act in the best interest of their clients.
Instead, the SEC has provided an alternative solution called Regulation BI. The intent is to hold brokers to a higher standard and require that they also act in the best interest of their clients. However, there are mixed reviews. Hilton believes that not much will change. It simply requires advisors that work for brokers/dealers to disclose more information by providing their clients with MORE documentation. The problem is that most people don't read all the paperwork they are given as it is.
Therefore, she suggests the best way to determine if your advisor is working in your best interest is to ask if they are acting in a fiduciary capacity while working with you. If the answer isn't a flat out "yes", then the advisor is not working in your best interest. The advisor may say that they are working dually in both roles. In her opinion, that is where things can become too confusing and the client is better off to work with someone else.
When developing a financial strategy the individual must understand what they are getting from their financial planner. Hilton explains that while there are approximately 350,000 financial planners in the United States, only about 80,000 of these are CERTIFIED FINANCIAL PLANNERS™. CERTIFIED FINANCIAL PLANNERS™, or CFPⓡs, are held to a higher standard and have a fiduciary obligation, which means they are required to act in the best interest of the client. However, even CFPⓡs can work under a brokerage that may impact the advice they give or the products they recommend. When choosing a financial planner, Hilton recommends individuals look for the following credentials.
- Ensure they are a CERTIFIED FINANCIAL PLANNER™. Anyone can call themselves a financial advisor, make sure they are a CFPⓡ before even considering working with them.
- Look for a minimum of 5 years of experience. For many financial advisors, the first 5 years are spent in the learning phase, they may be heavily influenced by their manager due to their lack of experience and therefore not always act in the best interest of the client.
- Check if they are Fee-Only or Fee-Based. Although these may sound similar, they couldn't be more different. Fee-only advisors only charge a fee for their services and do not receive a percent of the overall investment or make a commission off of investments or products sold.
- Find out if they are an Assets Under Management (AUM) advisor. These advisors can be somewhat sneaky in their fees. While they justify their fees by saying "it's only 1% or 1.5% of your assets", this is a never ending fee, which can add up to hundreds of thousands of dollars over time.
- See what types of funds they recommend. Ideally, the advisor will recommend funds with low expense ratios such as index funds or exchange-traded funds (ETF's). If they're not recommending one of those two, chances are they're not working in the client's best interest.
- Make sure the advisor you are working with does not work for an insurance company. Insurance companies inherently charge A LOT of fees. Advisors will pass off insurance products as if they are investment products and you will lose between 1-3% in your investments (ie. if the mutual fund had a return of 7%, you will only receive a 4-6% return), and most people are unaware that fees are even being charged. If you need insurance, it is better to work with a fee-only advisor and let them recommend who to work with and what type of insurance you should purchase.
- Ask your Advisor if they are solely acting as a fiduciary while working with them. If they are not or are in dual roles, then they are not acting in your best interest.
Shortly after moving to Austin, Texas, Hilton began working with Fidelity Investments, although she respects the company and enjoyed her experience working there, Hilton still didn't feel entirely fulfilled in her work. After realizing she had to fight her manager to go above and beyond for her client, Hilton decided to go her separate way. After years in the industry, Hilton had realized what was lacking. All of the other firms she had worked with, expected the clients to enter into the relationship flush with cash and ready to invest.
"There was no support or services available to the new investor who is just starting out," Hilton explains.
Founded in 2015, Hilton Financial Group takes a different approach.
"We work with clients from A to Z," says Hilton, "Starting with how they spend their money, to reducing costs, fixing credit scores to creating an investment strategy."
Prior to HFG, this simply didn't exist in the industry. Hilton's revolutionary services include 1-1 coaching, strategy sessions, retirement, and investment planning. However, her most popular service is the Premium Membership, a 3-month coaching program aimed at helping clients regain control of their finances, set goals, and build wealth.
Hilton's mother and two best friends are all nurses, which opened Hilton's eyes to the complete lack of resources available to nurses. While teachers and other government employees are provided a pension, most nurses are not so fortunate. This makes saving for their future all the more important. One of Hilton's financial mentoring programs is specifically targeted at helping nurses and other healthcare professionals gain clarity into their finances and achieve financial freedom.
For too long, financial planners implemented sneaky techniques that left clients overwhelmed and taken advantage of. Hilton seeks to shed light on the dark side of the industry while simultaneously providing a beacon of hope for clients to pursue a brighter financial future.
How to learn more about why it's important for your advisor to be a member of NAPFA and how to see if your advisor is a member of NAPFA: www.napfa.org. How to see if your financial advisor is certified: www.letsmakeaplan.org. How to see if your advisor has any disciplinary actions against him/her: www.brokercheck.finra.org.
SOURCE: Erin Hilton, CFP