How to Select a Financial Planner
When it's time to plan for a major purchase, manage your financial risk, plan for retirement or make estate or tax plans, a financial planner can be your guide to making the right decisions and meeting your goals. They can also save you time and help you avoid financial pitfalls.
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Instructions
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Do Your Homework
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Decide why you need a financial planner and make a list of your top life and financial priorities. A financial planner will help you map out a financial plan based on those priorities.
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2
Ask around to your friends, family and co-workers about whether they know of a financial planner that they would refer you to. If they don't know of any then you can peruse an online directory of a certifying or registering body of financial planners or you can simply check the yellow pages.
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Take time to understand the roles and titles of different types of financial planners. There are more than 50 designations that they can hold. Some of the most common are:
--Certified financial planner, or CFP: for those who have at least three years of experience, have passed certifying exams and adhere to a code of ethics.
--Chartered life underwriter, or CLU: for insurance agents who advise about and sell insurance products.
--Chartered financial consultant, or ChFC: for those who specialize in a certain type of insurance product and meet educational requirements set by the insurance company.
-Chartered retirement planning counselor, or CRPC: for those who specialize in retirement planning, have passed exams and adhere to a code of ethics.
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Narrow your search down to two or three financial planners and schedule appointments with them. The first meeting should be free. The goal is to discuss your needs and find out more about the financial planner.
Meet With the Financial Planner
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Ask how they are paid. Their pay could be structured in a number of ways:
--Commission: This is a standard pay structure for financial planners. When you make an investment with them, a percentage goes towards their salary. That commission may come from the company they work for or from the company the investment product is bought from.
--Flat rate: Some financial planners charge by the hour and some charge a flat rate for developing your financial plan.
--Asset-based fee: You may be charged a percentage of how much you invest. This fee will occur as an annual charge.
--Any combination of the above: Some financial planners have a blended pay structure. Ask them about theirs and be sure to understand their answers.
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Ask for their Form ADV. This document is used to register with the U.S. Securities and Exchange Commission (SEC). It will contain all the information you'll need to know about the financial planner's education, services, fees, and methods for investing. It will also have information about any possible history of disciplinary action taken against them.
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Ask about what to expect when working with them. Make sure to find out if they will be your only contact or if you'll be working with others.
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Make notes about how well they convey their answers to you. Ask yourself if they make it easy to understand what they're talking about or if they use a lot of jargon that may only be familiar to someone well versed in finance and investing.
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Decide which financial planner you want to work with. Once you have agreed on rates, services and expectations, get it all in writing and keep on file for future reference.
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