Our financial lives have become complicated. Not everyone has the time or skills to manage certain financial situations. Many individuals turn to a financial planner for their advice. Often there is a specific event or need (e.g., death of spouse, financial crisis such as layoff, retirement) that leads one to seek advice.
Anyone may call themselves a financial planner. Many planners are interested in their client’s needs and goals but some planners are interested in selling a financial product.
Begin your search for a financial planner by asking your friends, relatives, and work relatives for their recommendations. Professional organizations such as the Financial Planning Association and the National Association of Personal Financial Advisors will give you the names of planners in your area. Interview several planners before you select one with whom to work.
The Certified Financial Planner Board of Standards recommends questions one should ask when choosing a financial planner. The Financial Planning Association also has helpful information on how to choose a financial planner. It is especially important to find out their qualifications, services they offer, and how they are paid.
Obtain in writing how the planner will be paid. Many planners receive commissions on the products sold to you as a part of their financial planning recommendations. Other planners charge a fee based on an hourly rate or flat rate. Some planners charge a combination of fees and commissions. The National Association of Personal Financial Advisors is a professional organization of fee-only financial planners; they also will help you find a fee-only planner in your area.
If selling insurance or providing investment advice, planners are regulated by federal and state regulators for these activities but there is no regulation for general financial planning advice. A Certified Financial Planner® has met the educational and experience requirements and has passed a national test administered by the CFP Board of Standards. CFP certificants also must abide by a code of ethics. When interviewing a potential financial planner find out if they typically see clients that have goals and pressing issues similar to yours.