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How To Find The Right Financial Planner Using 10 Questions

Today, there are hundreds of thousands of people who call themselves financial planners, advisors or another type of financial professional. Maybe you’ve been wanting to work with one of these people, but you’ve been putting it off because you’re not sure how to go about finding one.

Have you ever asked, “How do I find the right financial planner for me?” If so, ask the following questions, which were obtained from the CFP Board. Use them to search for a planner that you’ll feel comfortable working with, and who can meet your needs.

1.  What experience do you have? Find out how long he’s been a planner and the types of companies he’s been associated with. Have him describe his work experience, and how it relates to his current role. Choose a planner who has experience helping people with their financial needs.

2.  What are your qualifications? Nowadays, many people may call themselves a “financial planner.” Ask her about the qualifications she has to give financial advice. Do they have any professional titles? Some of ones recognized in the industry include CFP (Certified Financial Planner), CPA (Certified Public Accountant), and ChFC (Chartered Financial Consultant).

Look for someone with proven experience in your area of need. This may be investments, tax planning, insurance, retirement planning, or estate planning. Also ask her about what she does to stay current with the changes in the financial planning profession.

3.  What services do you offer? The types of services he offers depends on factors including credentials, licenses, and areas of expertise. Planners usually can’t offer insurance, mutual funds, or stocks without the proper licenses. Some offer financial advice on a range of subjects without offering products. Others may offer advice only on specific topics such as retirement planning or tax issues.

4.  What is your approach to financial planning? Ask the planner about the typical clients and financial circumstances she likes to work with. Some like to develop a single comprehensive plan that includes all your financial goals. Others advise in specific areas as the need arises.

Certain planners require you to have a minimum net worth before they’ll consider working with you. Ask them if they’ll actually carry out the recommendations developed, or refer you to someone else who will do so. Make sure their views aren’t too cautious or overly aggressive for you.

5.  Will you be the only person working with me? The planner may work with you by himself, or may have others in the company that assist him. If others give help, you may want to meet everyone who will be working with you.

If the planner works with attorneys, insurance agents, or other professionals from outside their company to carry out your plan, get their information to check on their backgrounds.

6.  How will I pay for your services? Through a written agreement, the planner should clearly state how he will be paid for his services. Several ways that he can be paid include:

  • A salary paid by the company for which he works.
  • Fees such as an hourly rate, a flat rate, or on a percentage of your assets.
  • Commissions from products sold to you to carry out your plan.
  • A combination of fees and commissions. The planner may charge fees to develop the plan, and receive   commissions from any products sold.

7.  How much do you typically charge? While this amount will depend on your specific situation, the planner should be able to give you an estimate based on the work to be done. Such costs could include hourly rates, flat fees, or commission percentages they receive for selling products.

8.  Could anyone besides me benefit from your recommendations? The planner may have entered into business relationships that affect her judgment while working with you. This may prevent her from acting in your best interest. So to be clear, ask for a written description all conflicts of interest.

For instance, planners who offer insurance, mutual funds, or stocks usually have a business relationship with the companies that provide these products. They may also receive a fee for referring you to an accountant, insurance agent, or other professional.

9.  Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career? Regulatory organizations such as FINRA or your state insurance and securities departments keep records on the disciplinary history of planners. Ask what organizations the planner is regulated by, and contact them to do a background check.

Planners who have registered with the SEC as investment advisers, or who are associated with a company that is registered as an investment adviser, must be able to provide a Form ADV. This form will provide details on any disciplinary action involving the planner. Other sites to check disciplinary history include the CFP Board and the NASAA.

10.  Can I have it in writing? Ask for a written agreement that outlines the services that will be provided, and keep this document for future reference.

Have you worked with a financial planner before? What steps did you take to choose that person?

This article was included in the Carnival of Personal Finance for the week of April 26, 2010. Check out MD’s blog for more interesting articles, including a story of how someone quit their job to live out their passion, and ways to go green and save green!
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One Response to How To Find The Right Financial Planner Using 10 Questions

  1. Pingback: Carnival of Personal Finance #254: Inspiring Quotes « Finance Blog

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