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How to Choose a Certified Financial Planner

Last updated by on April 11, 2016

How to Choose a Financial Planner

There’s nothing better than self reliance and personal empowerment when it comes to financial planning. However, if you don’t yet have the confidence in yourself to manage your financial situation, you’re not alone. You also really only have two options:

A. wander aimlessly and hope you come out ahead and are able to meet your life’s goals
B. hire a financial planner

Unfortunately, finding a good financial planner with limited or no conflicts of interest is incredibly difficult to do, and this person may be one of the most important you’ll ever meet. Time and effort is necessary to seek out the right planner. This list of 10 characteristics can serve as a checklist when you’re looking to hire a financial planner.

1. They Charge an Hourly or a Flat Fee

financial plannerPlanners have four pay structures: hourly, flat fee, commission from products sold, or by % of assets managed. Don’t get into a situation where you are paying a percentage of your managed assets or a commission on products bought to a financial adviser. If they manage your assets, you are prisoner to their long-term strategy, and poor results.

2. They Educate you

A financial planner that withholds information or doesn’t take the time to teach you the basics is not a good one. Your financial planner should want you to know as much as they know so that eventually you can manage your own finances and refer all of your friends to him/her.

3. They are not a Friend, Co-Worker, or Family

Any time you bring emotional bonds into financial decisions it is usually at the sacrifice of results. Avoid the drama, highs, lows, and the potential to damage relationships if your investments go south.

4. They are Patient with their Advice

A financial planner that calls you with urgent hot stock picks does not have your best interests in mind. There should be no sense of urgency when it comes to sound investing that leads to long-term growth.

5. They are a Certified Financial Professional

All legit financial planners should have some sort of highly valued certification. Perhaps they are a Certified Public Account (CPA), Certified Financial Planner (CFP), or a Chartered Financial Consultant (ChFC). Make sure that they show you their credentials and then verify the credentials with the respective organization.

6. They are Up Front About their Strategy

Before you invest any money through a financial professional, they should have no qualms towards telling you exactly how they plan to invest it. Why? Any good financial planner is going to have a relatively passive investment strategy that they believe in and stick to.

7. They Care About more than just your Investments

Sound financial strategy involves a whole lot more than just the types of asset classes you are investing in. A good financial planner is going to invest the time to take a holistic look at your spending habits, debt obligations, life goals, and more.

8. They have a Good Reputation

You’re not always going to be able to find a good referral, but they certainly don’t hurt. Just be wary of a hot shot planner that has had a little short-term success in managing your buddy’s investments, and now they are the greatest investor to come along this side of Omaha.

9. They have Never Been Disciplined by the Authorities

Check with regulating authorities like your state’s insurance and securities dept., FINRA, and the CFP Board to make sure that your financial adviser does not have any black marks against them.

10. They Invoke Genuine Trust

If you are feeling nervous, fearful, or stressed energy when around an adviser, trust your instincts and get the heck out of there. If you don’t trust your financial planner, it’s not going to be a good business relationship, and there are plenty of other advisers out there.

11. They Abide to the Fiduciary Standard

Starting in April of 2017, financial advisers must abide to a new Department of Labor fiduciary rule that requires them to act in your best interests (for retirement accounts only, sadly). I would ask them to put it in writing that they always use the fiduciary standard.

Final Thoughts on Certified Financial Planners:

By finding your way to this site, hopefully you’re well on the way to being your own financial planner. If you do decide to go with a professional, take the time and effort to do it right. After all, your entire financial well-being is all that’s at stake, right?

Financial Planner Discussion:

  • Do you work with a financial planner? Why? Why not?
  • How did you get referred to your financial planner?
  • What’s the best/worst financial planner story you have?

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Steve says:

    A lot of good points here. It is amazing how many people I know walk into a local investment joint and entrust their life savings to some random tool who gets his advice from Jim Cramer or some other talking head. Choosing a financial planner should be done as carefully as choosing a spouse.

  • stephanie says:

    I have 2 financial advisers, and I completely lucked out that they’re both really awesome. One is at my bank in my hometown, where I opened a Roth IRA when I was 22 (knowing absolutely nothing about stocks, etc.). The other is through Edward Jones, and is in charge of my 403(b). Employees here were only given 3 options for companies to use for company retirement plans, and only 2 of those have representatives in town (which was very important to me).

    I am really glad you posted this article, though – I want to know what to look for when I switch jobs (and cities) in the future and need to find a new financial planner.

  • Check out NAPFA, it’s the National Association of Personal Financial Advisors. Members of NAPFA are fee only planners.

    They are the cream of the crop for free only planners and they truly have your best interest at heart.

  • Peter says:

    Great article, and I agree with all your points. I got a financial advisor a few months ago ( someone at Ameriprise that was recommended by a friend) and I count it among the best decisions I ever made.

    We pay a flat fee, and to be honest, it took me a good two+ weeks to get over the sticker shock of how much it costs to pay someone to manage my finances. However, I can’t tell you how good it feels not to worry about money, retirement, etc. The other perk about a flat fee is that I can call or email him whenever I want ( and I do ) without any fees.

    A couple of questions that helped me in finding a good adviser:
    1. Ask them to explain what different types of life insurance are, which type of life insurance make sense for you, and why.

    2. What is the adviser’s personal investment strategy?

    3. How will the adviser help you determine what your risk tolerance is?

    Everything he/she tells you should make sense, and you should be impressed with this person’s intellect and grasp of the subject. If you leave the meeting feeling confused or intimidated, then keep looking, this is not the adviser for you.

    Good luck!

  • Studenomics says:

    I have never had a financial planner in my life, why you may ask? I have taken too many securities and investment courses in University to allow someone else to manage my finances. Even if I hadn’t taken any courses in school, there is so much information on the internet that you can become your own financial planner. Just based on the fact that you are reading this blog it means that you are on the right path. It shows that you are doing your research and trying to educate yourself. If you need a financial planner because your life is already busy enough then an article like this is perfect for you.

    • MoneyGeek says:

      That’s what my friend’s husband said. Then he died suddenly and my friend and her family tried advisor after advisor to find out who they could trust.
      If you’re looking for someone to take care of your finances and your loved ones just as you would. I highly recommend that you start developing relationships you could trust early on. Life happens and gets in the way of our brilliant long term plans!

  • G.E. Miller says:

    @Peter – those are great questions to ask when you interview a financial planner. They are working for you, after all (or should be).

  • Craig says:

    Nice list you developed. I think not getting financially involved with friends or family for basically most financial situations is good advice. Always hard to separate the two when the time finally comes where a situation arises.

  • Financial Planning for Expectant Parents says:

    excellent advice on finding a financial professional to advise you. I would add that you should try to find a planner who is at about your same life stage so that they have a good understanding of where you are and where you want to be. For instance, I have two young children and my whole practice is geared towards new and expectant parents. I am highly tuned into the challenges that come with a growing family and can closely relate to my clients. On the other hand, I wouldn’t take on a client who is nearing retirement, since I don’t have as much insight to their goals and worries.

  • Ace says:

    CPA= Certified Public Accountant, FYI. And a lot of CPAs do not know anything about investment strategies.

  • G.E. Miller says:

    @Ace – thanks for catching the typo, and I agree, they wouldn’t be my first choice – but many of them do try to cross into financial management territory (not always necessarily investing).

  • Brian says:

    I recently used to help me find a Fee-Only financial advisor. This is the first time I have used a planner. Happy so far! I was able to narrow down my serch and request a specific advisor to contact me.

  • Investing 101 says:

    I believe that you have better returns if you let a pro handle your financial decisions especially if you are a beginner but it is best to use a reputable firm rather than an individual. Also, make sure you understand how they are paid. If you don’t, then you might be tricked into purchasing something that isn’t good for you just because it makes them more money.

  • Rhea says:

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    Have a great day.

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  • Evgeniy says:

    Interesting. financial planner is good. financial planner + intuition is the best.

  • financial advisior says:

    Ya all points are great. But what after heiring advisor. there are some question that we have to ask after heiring them:
    Here are the most important questions to ask the advisor:

    * How long have you been a financial advisor?

    * What makes you a good financial advisor?

    * What’s your educational background and what licenses, credentials, and other certifications do you have?

    * Have you ever been disciplined by the NASD or any regulatory agency during your career?

    * What type of client do you specialize in?

    * What services do you and your firm offer?

    * Do you create a written financial plan, and if so is there a cost?

    * Do you spend time educating your clients about money?

    * How do you service your clients?

    * How do you charge your clients (commission, fee-based, fee only, combination plan)?

    * How many clients do you have and how much money do you manage?

  • MoneyGeek says:

    You may want to ask, what did you do before this? Because there are green advisors too who were once doing something that required no education and then decided to get a Life Insurance license and call themselves a financial advisor.
    Make sure they have the right credentials. At the very minimum a Series 7 Securities license.
    That at least means they SHOULD understand investments.

    Who manages your finances?
    If they talk the walk, they should walk the walk.

    Get to know them. Think about it this way. Are they the kind of people who you know would be there for you and your family in your worst times? Are they your advocate?

  • John McD says:

    Great suggestions. I looked around for awhile before going with my planner now, Keith Steidle. He really stood out when I went to visit with him initially and he has done a great job ever since.


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