How to Choose the Right Financial Planner

So you are ready to hire an expert to help save, invest, and grow your money! Whether you’re taking the first step towards debt management, planning for a large investment, or simply don’t feel equipped to manage your personal finances on your own, you’re making a decision that will undoubtedly pay off in the long run.

Although hiring a professional for financial guidance is no longer just an option for the super wealthy, it’s not uncommon to find planners and firms who prefer to work with larger accounts. Don’t take this personally or let it deter you! You’ll want to work with someone who has the time to focus on your specific needs and is willing to establish a long-term relationship with you.

Since you will be entrusting this person with something so important, it’s crucial to make sure you are selecting not only the right type of professional for the job, but one with skills and credibility. While just about anyone can call themselves a financial planner, a Certified Financial Planner (CFP) is your best bet. CFPs are required to pass a test covering insurance, investments, taxation, employee benefits, retirement, and estate planning administered by the CFP Board of Standards, and therefore are best for making a broad assessment of your finances.

A good place to start looking for a CFP is by asking friends, family, or coworkers for referrals, in particular, those in a similar life stage or financial circumstance as you. You can find a planner directly through the websites of the Financial Planning Association or the National Association of Personal Financial Advisors (NAPFA). NAPFA planners offer fee-only services, which brings us to the importance of understanding your planner’s pay structure. A planner who earns money based on commission rather than fee-only or flat hourly rates could have an incentive to steer you in a particular direction. We recommend going with someone who offers a flat hourly rate or fee-only services.

Once you have a list of three or four potential planners in place, do a quick online search to assess their credibility. BrokerCheck can help you catch any unlawful or unethical behavior. The CFP Board’s site will verify that they have CFP certification status. If they pass your investigation, schedule a consultation to determine if they’ll be a good match not only just for your financial situation, but personality-wise too. Talking about your money can be very personal. Choosing a planner who you trust and get along with can make the process a lot easier, especially in the beginning.

When you meet, be prepared! Some questions we recommend asking are:

  • What services do you and your firm provide?
  • How do you charge for your services?
  • What licenses, credentials, or other certifications do you have?
  • What type of clients do you specialize in?
  • Who is your ideal client?
  • Are you a fiduciary, meaning someone who must place their client’s interests ahead of his or her own?
  • What is your investment approach?
  • How available are you to your clients and how much contact do you have with them?
  • Will I be working with you only or a team?

Remember, knowledge and preparation are key when hiring a financial advisor! Since you are here, you’ve already taken the right steps in educating yourself about the process. If you’re still questioning whether professional help is for you, check out our 7 signs you may need a financial advisor.