Finding a financial planner can be a daunting task, especially since he or she is someone who will potentially be managing your life savings and giving you advice on various important topics. This decision is not one that you should take lightly, so in today’s blog post you’ll learn 5 things that you need to evaluate in order to find a financial planner that is right for you.
How to Find a Financial Planner That’s Right For You
Defining what constitutes the “right type of financial planner” is in the eye of the beholder. But with that in mind, here are 5 things that you should evaluate when making your decision:
1. Interview 2 to 3 Financial Planners
Start by asking around if any of your friends, family, or co-workers use a financial planner. Ask them about their experience and what their financial planner does for them. What you’re trying to discover here is if they give a glowing recommendation. But it’s important to discern whether or not the recommendation is a result of their advisor having a good personality and is likable vs. if they actually provide true financial planning services. Ideally you want both.
Whether you have a referral from someone you know or not, you’ll still likely want to interview one or two other firms to find a financial planner that is a good fit for you. Unless you have multiple referrals from people you know, you’ll likely have to Google a couple more financial planners. Look at the points below to help you with this search.
2. Does The Financial Planning Firm Have a Good Web Presence
This is a pet peeve of mine. Whenever a company is promoting a product or service, I can’t stand it when I go to their website and it looks poor. If you’re going to hire a financial planner then you want someone who has taken the time to have their website designed in a professional way. If not, it gives the impression that they will treat your investments the same way.
In addition, I find it completely unprofessional when a person’s business email address ends in something like “@gmail.com”, “@yahoo.com, or “@aol.com” (believe it or not there are still people out there with an AOL account). For example, the email address might read something like email@example.com. Instead you would rather see the email address have the name of the company in it – firstname.lastname@example.org.
These things reflect that the financial planning firm actually spent the time and money necessary to set up their website and email properly. And it gives off a professional vibe.
3. Search For a Financial Planner, Not an Investment Manager.
This will be difficult to discern because everyone these days calls themselves a financial planner. We’ve had clients tell us over the years that their previous advisor claimed to be a “financial planner” only to discover later that they were just an investment manager and not really doing any sort of planning at all.
So, how can you properly discern this? Ideally you want to go to someone who is a Certified Financial Planner™ (CFP®). This credential represents that a financial planner has been through a rigorous curriculum covering many different financial planning topics. Additionally, they had to pass a very difficult test (that many do not pass) and complete 3 years of service in order to be called a CFP®. Oh and by they way, a Certified Financial Planner™ also has to at least have a Bachelor’s Degree. So, in short, there is a very high likelihood that a CFP® will truly work with you on a financial planning basis (which includes your investments) and won’t just be an investment manager.
4. Look for a Fee-Only Financial Planner.
A Fee-Only planner is one who is solely compensated by the client for the financial planning advice and investment management services provided. They do not sell products or earn any commissions. In addition, they do not work for a bank, insurance company, investment company, or brokerage firm. In essence, Fee-Only planners are independent of these types of firms. Advisors who work for these firms are usually required to sell products for a commission and they must meet sales and product quotas. So essentially this means that Fee-Only planners are advice-driven whereas Commission-based planners are product-driven.
A Fee-Only planner is also a Fiduciary. This means they must put your interests ahead of their own, disclose conflicts of interest, and disclose their fees. An advisor who works for one of the companies mentioned above is not considered a fiduciary. They DO NOT have to do what’s in your best interest. What this means is that they can sell you a product from the company they work for even if it’s more expensive than an equivalent type product at another firm. In other words, their first loyalty is to their company not to you!
A great place to search for a Fee-Only advisor is NAPFA (National Association of Personal Financial Advisors). This is an association of financial planners that agree to operate in a 100% Fee-Only capacity.
5. Choose a Financial Planner That Doesn’t Only Work With the Wealthy.
Many financial planning firms will only work with you if you have a lot of money – $500K or $1M is pretty common. I even know of one firm that requires you to have at least $10M before you can become a client. This is absolutely ludicrous!
The idea that some firms only help the wealthy is a concept that completely infuriates me! It is very irresponsible and selfish for firms to act in this manner. We as financial planners have a great opportunity / responsibility to help people who aren’t yet wealthy, yet many still continue to be turned away.
So my advice to you regarding this is to choose a financial planner that doesn’t just cater to the wealthy. You want to choose a firm that helps all people regardless of how much money they have!
So, as you start your search to find a financial planner that’s right for you, hopefully you find the above suggestions beneficial. In summary, plan to interview 2 to 3 financial planners, ensure they have a professional web presence, look for someone with a good personality that actually does financial planning, aim for an Independent Fee-Only / Fiduciary Advisor, and identify a financial planner that is willing to help out all people regardless of net worth size.
Have you ever searched for a financial planner? What was your experience like? Do you have any suggestions based on your experience? Please share any thoughts, comments, or questions below.
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Brad E.S. Tinnon
CERTIFIED FINANCIAL PLANNER™