If you want financial planning, finding a professional to guide you through the process is a daunting proposition. Even referrals aren’t always the solution, since many of your friends might not completely understand what their financial advisor does or whether what’s done is right for them. Finding a financial planner can be intricate and in depth. There are also a few simple concerns you can explore to work toward finding a professional that’s a good fit for you. Here are four basic issues you can address.
The first is what the planner’s credentials are. Credentials are different from licenses. So having a securities license, insurance license, or a title from a financial institution will not automatically provide the training to qualify an individual for financial planning. Financial advisors who are Certified Financial Planners have the training and experience to provide financial planning. This incorporates, but isn’t limited to, investments, taxes, retirement planning, estate planning, cash flow and insurance.
The next step is to ask how the planner is compensated. A fee-only planner doesn’t need to sell you products like investments or insurance to make a living. The planner may be paid through a flat retainer, hourly, or some percentage of assets that are managed.
The third question is what services the planner provides. If you work for a living and all your financial needs must be met with what you earn, you might not need an advisor who specializes in people with a large inheritance. And if you want someone who’ll incorporate all the pieces of your financial life, you won’t be best serviced by a planner who only manages investments.
Another question to address is whether the planner has an obligation to do what’s in your best interest or if he works for a firm that requires that he provide certain products or services to all clients, even if the client doesn’t need them.
So where can you find advisors that are likely to have answers to these questions that will make it easier for you to find one that works for you? There are a couple of professional organizations that foster fee-only financial planners that have their clients’ best interests as their primary goal. The National Association of Personal Financial Advisors (NAPFA) at www.napfa.org and the Alliance of Cambridge Advisors at www.acaplanners.org have advisor search functions. Also, the NAPFA site has a more in depth questionnaire you can use for more in depth interview questions.