By Jim Miller
A good place to start your search for a financial planner is by asking friends or relatives. If you don’t know anyone who can give you a referral, and you’re looking for broad-based financial advice, hire a certified financial planner, or CFP, who are considered the “gold standard” in the industry. CFPs must act as fiduciaries, putting their client’s best interest above their own.
To get the CFP credential, they must have a college degree and be educated in a wide range of personal finance subjects, pass a rigorous certification exam, have three years professional experience, meet continuing-education requirements and abide by a code of ethics. CFPs are taught to look at the big picture view of your finances, talking you through your goals, as well as advising you on the details of your financial life.
You’re also probably better off hiring a CFP that’s a fee-only planner, versus one who earns a commission by selling you financial products. Fee-only planners charge only for their services — for example you might pay $150 to $350 an hour for a financial tune-up, a flat fee per project or an asset-based fee.
To find a fee-only planner in your area, use the National Association of Personal Financial Advisors (NAPFA.org), which carefully vets all members and offers an online directory. Or see the Garrett Planning Network (GarrettPlanningNetwork.com), a network of fee-only advisers. Or the Alliance of Comprehensive Planners (ACplanners.org), a community of fee-only advisors that charge annual retainers.
If your needs are more specific, some other financial professionals to consider are a registered investment adviser (RIA) who is registered with the Securities and Exchange Commission or a state securities regulator to manage investment portfolios; a chartered financial consultant (ChFC), who specialize in insurance and estate planning; and a certified public accountant (CPA), who can help with tax planning.
Be leery of many other financial advising titles, designations and certifications that are out there like the certified financial consultant (CFC) or the wealth management specialist (WMS). Many of these require no more than a few courses at a seminar or online, which means they’re not worth much.
How to Choose — After you find a few candidates, call them up and schedule an appointment to meet and interview them. Find out about their experience, expertise and the types of services they provide; if they’re a fiduciary; how they charge and how much; what is their investment philosophy; and how will they handle your ongoing questions or financial needs. Look for someone whose clients are in situations similar to yours and who’s available as often as you need them.
It’s also wise to do a background check on your potential adviser. At LetsMakeaPlan.org, you can verify a planner’s certification as CFP (click on “Verify CFP Professional Status”). You’ll also see any information on the planner’s disciplinary history.
To vet a registered investment adviser, go to Investor.gov where you can search an individual’s name and click on “Detailed Report” to see information on qualifications, employment history, disciplinary actions, criminal convictions and more.
To check out a broker, visit BrokerCheck.finra.org where you can search an individual or firm’s name to get details like years of experience, licensing, exams passed and regulatory actions.