How to Pick a Financial Planner
Choosing a financial planner can be an overwhelming process. An entire financial future can be made or destroyed for an individual or entire families. A proper financial plan can create generations of wealth, whereas bad plans or plans poorly executed can erode an entire lifetime of earning and planning.
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Instructions
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How to Pick a Financial Planner
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Ask friends and family members about the financial planners they have used. Don't ask for referrals. Instead, ask for information about what they like and don't like about specific planners. What is good for one person's situation may not be for another, so asking for referrals won't give you the information needed about a variety of people and personalities.
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Do a search in your area on financial planners. This might be through the yellow pages or a Google search. The Financial Planning Association has a site that can search by city or zip code (fpaforfinancialplanning.org). The Certified Financial Planner Board of Standards is also a good place to start looking. Go to cfp.net/search to conduct a radius search for a location most preferable.
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3
Research the credentials of planners until you have a list of five that you are satisfied have the credentials to do the job. Financial planners come with various credentials. Some may be CPAs while others are stockbrokers with other credentials. You can tell a lot about credentials by a business card or web page contact information. Designations such as CFP (Certified Financial Planner), CPA (Certified Public Accountant), CFA (Chartered Financial Analyst), CFS (Certified Fund Specialist), ChFC (Chartered Financial Consultant) and CIC (Chartered Investment Counselor) are all designations to look for either on business cards, websites or personal biographies.
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Search the names of the five candidates with the Certified Financial Planner Board of Standards listed in Step 2. This is a regulatory agency that governs financial planners specifically. Check for complaints or disciplinary actions taken against them. This information will be found in the last column after a search called "CFP Board Public Disciplinary History." Those with a "yes" as a hyperlink should be reconsidered and reviewed with higher scrutiny (or discarded).
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5
Search candidate records at other regulatory agencies such as Financial Industry Regulatory Authority (FINRA) for stock brokers or Board of Accountancy for CPAs. You want to see if there is a history of complaints or lawsuits. FINRA is the federal authority for securities transactions and monitoring. Go to FINRA.org and select "Search" on the right column tab. (Note: This search is only good for financial planners who also hold securities licenses. It does not mean they are better or worse for not being listed here, it just means they haven't taken FINRA exams and registration.)
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6
Interview the five candidates (if they have clear regulatory histories). At this point, you should already feel comfortable with their credentials and ability. You are interviewing them to see if they are a good social fit for you. This is a person who will be involved with planning your retirement, providing for children and creating a legacy. You need to feel comfortable picking up the phone to call your financial planner. Good questions to start with are asking about models and strategies for planning, when and how changes are deemed necessary, and how does the plan grow over time.
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Tips & Warnings
Financial planners will orchestrate the various parts of a person's financial life: real assets, life insurance, investments and retirement planning. They work with accountants, investment professionals and trust attorneys to ensure that their client's plan is the most effective plan for his needs. Many have licensing beyond financial planner credentials and may be investment advisers or attorneys as well.
