Three Simple Steps For Finding Your Financial Planner

More often than not, you’ll find planners with a wide range of experience, but rarely get the aha! moment of one whose experience matches with your own unique financial history and goals. Think about finding a financial planner as hiring a personal chief financial officer (CFO). This is someone who is able to look at your finances holistically and help you in the areas of budgeting, taxes, estate planning, investing and more. Following these three simple steps will help you make a more informed decision in hiring the right planner for you.

Step 1: Understand Your Why 

Before starting your search for a financial planner, it’s worth understanding why you are searching for one. You may be asking yourself: “How can I worry less about retiring comfortably?” Or, your question may be a little more complex: “Is my existing financial plan actually right for me?”

Regardless of how simple or complex the question, a financial planner can help steer you toward answers around saving, investing, organizing cash flow, paying debt, saving for college, retirement plans and other big financial decisions. They can also help you set and work on specific goals and feel more confident and financially prepared for the long term.

Long-Term Well-Being Matters: 

Understanding why you need a planner is key to improving your overall well-being. Research published in The Journal of Consumer Research shows that financial security is as crucial as health, job satisfaction, and stable relationships when it comes to feeling fulfilled. Your financial planner should know your financial history and goals just as well as your doctor knows your medical history.

A Holistic Perspective: 

Even if you’ve successfully managed your finances on your own, a financial planner can provide a fresh set of eyes. Much like bestselling author Lori Gottlieb discusses in Maybe You Should Talk To Someone, we often need a nonbiased perspective to help us genuinely understand where our decision-making falters.

A fiduciary financial advisor can help you avoid the same ineffective financial patterns by keeping you disciplined about your strategies. They can also offer guidance during uncertain times, all while remaining impartial and keeping you accountable for your long-term financial goals.

The first thing you need to do to narrow down your options is to start with the basics. Think about how you are managing your money now and how you would like it to be managed in the future. Understand your specific situation and the kind of advice you need.

Step 2: Consider Credentials And Compensation

Because you want the best financial advice, you need to look for the right credentials. These include Certified Financial Planners (CFPs) and Chartered Financial Analysts (CFA®s), which means they’ve passed examinations on the specifics of personal finance and investing, respectively. While certifications vary, these advisors are (ideally) adhering to an ethics policy and consistently meet continuing education requirements to keep themselves in top shape to serve you. Because of the nature of these credentials, they go hand in hand with thousands of hours of financial planning experience.

It’s also important to ask about compensation structures. Is the planner commission-based or commission-free? Commission-based advisors may have incentives to promote certain products or services, while commission-free advisors work for a clear, agreed-upon rate. Fee-based advisors vary in cost.

If you are looking for someone who will have your best interests at heart, consider a planner who is a fiduciary. This means they have pledged to act in their clients’ best interest.

Step 3: Ask Questions

Once you have narrowed options, ask questions. Consider the first call with your potential financial planner a “first date.” Are they listening to your concerns or talking a mile a minute? These can be indicators of your relationship, so keep an eye out for red flags.

You’ll also want to ask about their experience. Dig a little deeper, and ask about their firm’s philosophy and their financial planning services. Ask about the clients they serve. You want someone who’s made progress with clients in similar situations to yours. Is their approach aligned with yours?

Double-check Step 2 by asking if they are associated with a broker-dealer. Do they get compensated for recommending products/services?

Tip: Verify the information the financial planner has given you by checking their record and credentials. Look them up on membership organizations they are part of, like the National Association of Personal Financial Advisors.

Don’t be shy while interviewing your potential planner. Focus on evaluating whether the answers provided match your why.

Finding A Financial Planner

There is a common misconception that a household CFO is only for the rich. People think of it as expensive and not necessary, but there are great financial planners out there for everyone. They can be beneficial regardless of your income and will help you have a plan for the future and prepare for big life milestones, like paying for college, buying a house, getting married, switching jobs or retiring. Picking the right financial planner fpr you can be overwhelming, but oftentimes, if done correctly, very rewarding not only for your financial security but your overall well-being.