Smart ways to choose a financial planner
Dear Savvy Senior,
Can you recommend some tips on finding and choosing a good financial planner? My wife and I are both in our late 50s and would like to get some professional advice to help us better prepare for our retirement years.
With all the different financial planners, advisers and services available today, finding and choosing a trusted professional that can help you meet your financial goals can be confusing. Here are a few suggestions to consider:
Where to look
A good place to start your search is by asking friends or relatives for recommendations. 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.
Advisers with this designation are considered the “gold standard” in the industry. CFPs must act as fiduciaries, putting their clients’ best interests above their own. [However, see “Protect yourself from fraud by a fiduciary” on website.]
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.
You’re also probably better off hiring a CFP that’s a fee-only planner, verses 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 fee based on a percentage of your assets.
To find a fee-only planner in your area, use the National Association of Personal Financial Advisors (NAPFA.org), which carefully vets all members.
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, consider 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 specializes 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.
To research the different certifications or designations, visit FINRA.org/investors.
How to choose
After you find a few candidates in your area, 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 is 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 a CFP.
To vet a registered investment adviser, go to Investor.gov, where you can search an individual’s name.
To check out a broker, visit BrokerCheck finra.org to search an individual or firm’s name and to get details such as years of experience, licensing, exams passed and regulatory actions.