How To Choose A Financial Planner

Before you set out to find a financial planner, take some time to think about what you want a planner to do for you. Once you have determined what you’re looking to get out of a relationship with a planner, it is easier to find one who offers the services you desire. So before you start contacting planners, take a moment to think about what you want to accomplish – investment help, retirement planning, or a comprehensive financial plan.

You’ll probably want to interview at least three planners before you choose the one to work with. You may want to consider asking people you know if they work with someone they would recommend. Ask your other advisors as well, your CPA or attorney may have a few planners that they work closely with.

To assist in your search, we have provided the following links to make finding a financial planner easier.

Certified Divorce Financial Analyst (CDFA) (800) 875-1760
National Association of Personal Financial Advisors (NAPFA) (888) 333-6659
Society of Financial Service Professionals (ChFC® and CLU®) (800) 392-6900
Find a CPA Personal Financial Specialist (CPA/PFS)

When you call each planner, here are ten questions to ask:

1. What are your credentials?

While there are no formal requirements to practice as a financial planner, there are several financial planning designations that will assure you of a minimum level of education and experience. A person holding the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation must pass five college-level courses that cover topics such as retirement planning, estate planning, tax planning, investment analysis, and employee benefits. Then they must pass a rigorous certification exam. Planners also must have a bachelor’s degree and meet experience requirements set by the CFP Board.

Another credential is the Certified Public Accountant/Personal Financial Specialist (CPA/PFS). These are CPAs who are members of the American Institute of Certified Public Accountants (AICPA), have at least 3 years of experience in financial planning, and pass a comprehensive and rigorous personal financial planning exam.

For a more complete description of different financial planning designations, check out:

2. Can you tell me about your experience?

It’s important to know how long the planner has been in practice, and with what companies. And you’ll want to know if they have experience working with clients who have financial issues like yours. If they have been with a number of different firms in a short period of time, ask why.

3. What services do you offer?

Find out what financial planning services they offer, as well as other services they provide. Some stockbrokers or insurance agents may earn a financial planning designation to appeal to more clients. Other planners may be fee-only, providing advice that may be limited to your planning needs, but they may not be able to provide specific investment options. Make sure you choose a planner that will meet all of your needs.

4. Do you specialize in a particular area?

Some planners work only with a particular type of client. Others focus on one or two planning areas, such as retirement or education planning. Because planners offer different services and have various fee structures, it’s a good idea to know what type of services you want so you can find out if the planner is a match.

5. Will others in your office be working with me?

Depending on the size of the planner’s practice, there may be other planners, paraplanners or other professionals you will also work with. Be sure to find out who will handle the maintenance of your account and who else will be involved in your financial planning relationship.

6. How are you compensated?

There is a wide variety of ways that planners get paid. It’s important to ask this question upfront, so there are no misunderstandings. A financial planning agreement, or engagement letter, should clearly spell out the compensation arrangement. Planners can be paid as fee-only, commission-only or fee-based, which is a combination of fees and commissions. Fee only arrangements can include a flat fee, hourly billing, or a fee based on a percentage of assets under management.

7. Do you recommend specific investments?

There is no right or wrong answer to this question, but you need to know if you will get this type of advice. Whether the planner receives a fee or commission for recommending a specific investment is less important than the quality of the advice. Ask what criteria they use to screen investments and if most of their clients hold the same stocks or investments.

8. Have you ever been disciplined for unprofessional behavior?

A number of regulatory agencies keep records on disciplinary actions of financial planners. These include the Financial Industry Regulatory Authority (FINRA), CFP Board of Standards (if the planner has a CFP® designation) and your state securities and insurance departments.

9. Can you give me references to some of your clients?

Many planners are happy to let you speak with a few of their clients to find out how their experience has been working with that planner. Other planners do not provide client references due to confidentiality issues. If you are able to check references, find out how often their planner calls them, how easy is it to get an appointment, and whether or not they would recommend their planner.

10. What questions do you have for me?

A good planner wants to know what your needs are, your work and family situation, and what kind of advice you are seeking. If a planner does NOT ask you a lot of questions when you call to interview them, it could be a red flag. You want a financial planner that focuses on your goals, not theirs.

After asking these questions of three or more planners, you may find one that clearly fits the bill. If not, don’t be afraid to keep looking for more referrals. As you talk to these planners, get a feel for their style – you want to make sure you’ll be comfortable revealing personal information to your planner.

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