Three Simple Steps For Finding Your Financial Planner

Finding the right financial planner for you often ends up feeling like searching for a needle in a haystack. Follow these 3 simple steps to find your ideal financial planner.

Published Oct. 7, 2020

Reading Time: 5 minutes.

 

More often than not, you’ll find planners with a wide range of experience, but rarely get the aha! moment of one whose expertise matches precisely 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 the most 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: 

The reason for first seeking to understand your why can be found in a study published in The Journal of Consumer Research. Perceived financial well-being plays an important part in overall well-being. The study found that financial security is as important as health, job satisfaction and relationship stability combined.

By evaluating why a financial planner can help, you’re one step closer. The right financial planner is someone who knows what they’re doing while also understanding you. Just like your doctor, your planner should know exactly what to do based on your 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 financial planner 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 to 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 (CFAs), 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.

Also look for how they’re compensated. Are they commission-based or commission-free advisors? The former will likely have an incentive to guide toward specific services or products, of which they benefit, and the latter work by charging a fee for the services offered. 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 can be overwhelming, but oftentimes, if done correctly, very rewarding not only for your financial security but your overall well-being.

Disclosure: This blog is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.