Choosing A Top 2% Financial Planner

February 10, 2022

Are you looking for a financial planner to help you sort out all the volatility in the stock market? Not to mention the constant discussion of potential tax law changes? Don’t worry. This is not a sales pitch.

In fact, as workplace financial educators, we often get asked if we provide financial planning and coaching directly for individuals. Unfortunately, we have to turn them down since we only work with employees through financial wellness benefits their employer provides. Financial Finesse strives to have the most impressive team of financial planners that anyone would recommend to a friend or family member.

So how did we find them? The answer is a rigorous series of interviews and auditions from which only the top 2% are hired. While you can’t duplicate the process exactly, there are many aspects that can be applied to your search.

Follow the money

Before we even begin looking at resumes, we make it very clear that we are not hiring commissioned salespeople. In fact, our planners have to give up any sales licenses upon being hired. After all, even the most honest planners can talk themselves into believing something that their paycheck is dependent upon.

To avoid these types of biases, look for planners that don’t sell financial products. Look for planners that charge a fee. However, be aware that “fee-based” planners usually charge a fee and collect a commission. Instead, you want a “fee-only” planner that doesn’t accept commissions at all.

One resource is the National Association of Personal Financial Advisors or NAPFA, which is an organization of fee-only financial advisors. Many of them charge fees based on a percentage of the assets they manage. They also typically require a minimum level of assets to work with them. However, some charge fixed annual, monthly, or hourly fees instead. I find this to be the most unbiased approach and usually the most cost-effective as well.

Know your ABCs and CFPs

You wouldn’t go to a doctor without an MD or a lawyer without a law degree, would you? Doctors and lawyers are legally required to have certain designations in order to practice, but not so for financial planners. They must simply pass two tests. One on securities law to sell or provide advice on investments and another on insurance law to sell insurance.

To fill the gap, an alphabet soup of designations has arisen that planners can purchase with the hope of buying some credibility. It’s essentially just another form of marketing. This has led to a lot of confusion for people looking for expertise.

While there are many respected financial planning credentials, all of our planners are required to have the CFP® mark. The CFP® mark has long been the most widely recognized designation in the profession. To become CFP® certified, a financial planner must attain a certain level of financial education, pass a comprehensive financial planning exam, have at least three years of full-time experience, and undergo a background check. To stay in good standing, planners must continue taking continuing education courses and maintain high ethical standards. While no screening process is perfect, it can weed out a lot of people you don’t want handling your money. Other worthy designations include the ChFC and PFS (which is only available to a CPA, which is another trustworthy credential).

Experience matters

While you must have three years of experience to gain a CFP® certification, Financial Finesse requires at least ten years. Research has shown that it takes about 10,000 hours of deliberate practice to master a skill, including financial planning. This is especially important in the financial industry. Many financial planners enter the profession with no financial background then set loose after little more than sales training.

For example, I started my financial career right out of college largely based on having done well selling cutlery. Needless to say, I’m a much better planner now than I was then. I wasn’t the only one without any real financial experience though. Most of my colleagues were in the same boat, and many decided to switch careers within the first few years, forcing their clients to find a new planner.

Ten years also usually gives financial planners exposure to a full market cycle. That’s important because there many hard-learned lessons at each stage of the cycle. It’s probably best if a planner isn’t learning those lessons with your life savings.

Personality matters too

Once we screen resumes for credentials and experience, we conduct a series of interviews and auditions. These interviews test the candidate’s financial knowledge, ability to provide education and guidance, and whether they’re a good cultural fit. Likewise, once you’ve narrowed your search, interview at least three to determine the one most personally compatible with you. Are they easy to talk with? Do they seem to listen and really understand you? Do they come across as trustworthy?

Trust but verify

Before we hire anyone, we check their references and credit report. Ask your prospective planner if they have any clients similar to you that you can call for a reference. Almost anyone can find someone to provide a good reference so you’ll want to do your own research too. You can find information on the Investment Advisor Public Disclosure website if the planner is an investment broker or advisor.

It may seem like a lot to do, but choosing a financial planner is a big decision. This can be a lifelong relationship with someone that can help you achieve some of your most important goals. Don’t you want them to be in the top 2%?