Finding the Right Financial Planner for You

Financial planners help their clients develop a strategy for reaching their financial goals, such as planning for retirement, eliminating debt or saving for a home or college expenses.

Many advisors specialize in areas like taxes, retirement, investment or insurance. There are many types of financial advisors in the United States and even abroad, and each one specializes in helping their clients achieve certain goals. Some can help you make the most money quickly, while others can help you plan to provide for your children and grandchildren. Evaluating your current situation and your needs will help you determine what type of advice you need. Most importantly, finding someone who genuinely cares about helping you succeed is an important factor in making the best decision possible. Here are a few tips on selecting the right financial planner for you.

Credentials

The most qualified financial planners hold credentials like Certified Financial Planner (CFP) and Certified Public Accountant (CPA). Each of these credentials requires advisors to complete rigorous coursework, pass a comprehensive exam and hold a college degree. Hiring an advisor with professional certifications ensures you will be working with someone with the knowledge required to help you be successful. Financial planners who hold professional certifications are also expected to abide by a code of ethics that mandates that they operate with the highest moral standards possible.

Conduct a background check on your candidates to make sure they are in good standing with government regulations. Check with the Securities and Exchange Commission to view a copy of the candidate’s form ADV. The form ADV is a report that the federal government requires from financial planners managing more than $25 million of assets. Any disciplinary action taken against the financial advisor will show up in the report. The report will also show data about their fees, so that there is no surprise when it comes to how they will be paid. Financial planners who manage less than $25 million in assets must register with the securities regulator in the state in which they do business. Look for someone who has the right credentials and who has a clean record with the both the state and federal government.

Consider Pay Structure

Financial planners earn their income by charging either a commission or a flat-fee. Advisors who get paid based on commission earn their money by collecting a fee when they sell you specific products or services from one of their partners. While there is nothing legally wrong with a commission fee structure, you may question whether or not they are steering you towards a product that serves their interests rather than yours.

Fee-based financial planners, on the other hand, charge a set fee whether it be hourly, monthly, or a percentage of the value of your portfolio. For the most unbiased advice, try to stick with a fixed-fee broker as they will be less likely to sell you products for their gain and instead focus on helping you achieve your goals. If you aren’t comfortable with the amount of the fee, ask if they are willing to negotiate. There is no guarantee that they will and they aren’t required to do so. However, a financial planner who is willing to negotiate on their fee for the sake of helping you succeed is likely someone who has your best interest at heart. Be sure you are clear upfront on how your financial planner will be paid and get it in writing.

Determine the Right Fit

Perhaps the most important thing to look for in a financial planner is someone who is the right fit for your financial situation. You want someone who shares your same philosophy on money, someone who understands your goals, and someone whom you trust. When starting your search for a financial planner, first decide what type of advice you need.

Do you want tax advice? If so, you should consult a CPA. If you need help planning for retirement, seek out someone who specializes in retirement planning. If on the other hand you need help planning your insurance needs, an insurance broker is what you need.

Some financial planners have enough knowledge to offer a wide range of services, so that you don’t need to hire multiple people. Depending on your situation, it may make more sense to hire someone who is a generalist as they will have a more comprehensive picture of your situation which puts them in a better position to help you develop a solid plan.

Next, schedule a meeting so that you can get a feel for the person you will be working with. Many advisors offer a free introductory session. Take advantage of that time to ask all the questions you need to be comfortable with your decision. Ask how long they have been in business. Ask what type of experience they have helping clients with goals similar to yours and their success rate in helping those clients achieve those goals. Ask if they are willing to give you references from their clients. Privacy laws may limit how much information an advisor can give you about their clients, but it cannot hurt to ask. You may be able to gather some information about the candidate from online reviews. You can also check with the Better Business Bureau to see if there have been complaints filed against the advisor.

A good financial planner will take the time to explain everything to you. They will also spend time assessing your current financial situation and your goals. The person you hire should show a genuine interest in helping you be successful. Try to avoid someone who offers you advice without taking the time to fully understand your goals. Remember, this is someone who you will need to develop a lasting relationship with, so be sure to interview several candidates before making a decision. If you do hire someone who you later determine is not the right fit, don’t feel you are stuck. It is perfectly fine to keep trying until you find someone with whom you are completely comfortable.

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