Top 10 Tips For What to Look For in a Financial Planner

A startling 33% of Americans don’t have a financial plan for the future. It’s a common misconception that making a financial plan and having a professional help you out is something only for the extremely wealthy, but people in all income brackets use a financial planner. Financial planners can help you with both improving your finances overall by saving, investing, and growing your money as well as more “micro” goals like getting ready to buy a home. Here’s what you need to know about finding the right financial planner. 

1. Make sure you’re working with an independent certified financial planner (CFP.)
There are many different kinds of financial professionals out there and almost anyone can call himself or herself a financial planner, but the only credential that matters is a CFP. CFPs must pass a rigorous exam and set of standards regarding helping people with personal finance, and receive continuing education every year to maintain their license. 

2. Examine the code of ethics that your financial planner is held to.
Financial planners must adhere to ethics codes set by professional associations they belong to as well as state laws. You want to make sure they are looking out for your best interest, so check over their ethics code and look for words like “fiduciary duty” and language that requires them to put their clients first. 

3. Consider your financial planner’s fee structure.
Financial planners make a living from commissions or by a flat rate, which may be by the hour. If they make commission based on how many times you buy and sell investments, they may not steer you where you want to go. Flat rate may be fine if you just want help with a specific issue. However, if the financial planner makes their money as a percentage of the assets they are managing for you then that gives them more incentive to research your options. 

4. How much do you have to invest?
Many financial planners only want to work with clients who have a minimum amount of investable cash, such as at least $250,000 if they are well known and want to limit their work to clients who can generate more earnings for them. Others are more willing to work with beginner clients. 

5. You can choose a financial planner by your specific need.
Are you looking for long-term asset management? Help with figuring out a plan to pay for your child’s college tuition? Financial planners specialize in different areas. 

6. Professional societies are a good place to look.
If you can’t get a friend or family member to recommend a planner who they trust, you can look at professional societies like National Association of Personal Financial Advisors (NAPFA) to find someone local. 

7. Check that your planner’s credentials are current.
See who administers their credentials and call the administrator to make sure it’s current. For CFPs, you can check here. 

8. Run a background check on your planner.
Have they been convicted of any financial crimes? Had any disciplinary actions taken by regulatory agencies? 

9. Don’t work with a planner who says they can beat the markets.
You want advice on a wide range of financial issues, not promises that they can just beat the market. Never deal with a financial planner who does the latter. 

10. Is the financial planner a fiduciary?
In addition to adhering to a code of ethics, being a fiduciary means they pledge to serve their clients’ best interests or else they fail to meet the sustainability standard. It’s a deal-breaker if they are not one.

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