- A financial planner can help you plan for your retirement, build an investment portfolio, budget your money to reach your financial goals, and much more.
- When looking to hire a financial planner, be sure to consider their specialties and certifications.
- You should also consider how financial planners charge, which can range from a flat fee, an hourly rate, a retainer, a percentage of assets, or a commission.
- Find a financial advisor near you with SmartAdvisor.
Hiring a financial planner can help you achieve your short-term or long-term goals, such as having a comfortable retirement, financing your child’s college tuition, or buying a home.
However, these professionals are not one size fits all and finding the right one is critical to your success. Here’s what you need to know about financial planners and how to zero in on the best one for your goals and budget.
Understand your financial needs
To choose the right financial planner, you must first understand what you are trying to accomplish. Looking to maximize your retirement funds? Do you want to get more out of your investments? Is your estate and legacy planning the most important thing?
Financial planners generally have specialties, so you’ll want to choose one that closely aligns with your goals. Common financial planning specialties include:
- estate planning
- invest
- retirement planning
- business planning
- debt management
- budget
- tax planning
- Sure
There are also planners who specialize in specific life stages, demographics, or even people with certain occupations.
“When looking for a financial planner, it’s important to understand exactly what you’re looking for,” says Jay Zigmont, CFP® planner and founder of childless wealth, which focuses on financial planning for adults who decide not to have children. “You’ll find planners that specialize in almost every group, job, and life stage, so find one that’s right for you.”
Choose a financial planner who is a trust is also important. This means that they must avoid conflicts of interest and always put their interests first.
“A planner operating under the fiduciary standard is required by law to always keep your best financial interests ahead of their own,” says Jason Steeno, president of the financial advisory firm. CoreCap Investments in Southfield, Michigan.
1. Look for financial planner options in your area
There are many ways to find a financial planner near you. Asking friends, family, and colleagues is often a good place to start, as they can recommend local planners they’ve had personal experience with.
You can also use one of these online resources, all of which allow you to filter by geographic area:
- Financial Planning Association: The FPA tool allows you to search for CFP® professionals in your area and you can filter by specialty, compensation type, and certification.
- National Association of Personal Financial Advisors: With the NAPFA search tool, you enter your zip code and you can filter planners based on how far away they are from you. There’s also a map you can use to see all of your options in one place.
- let’s make a plan: This is the search tool for the Board of Standards for Certified Financial Planners. You can search by location, services offered, or both. All planners listed are CFP® Professionals.
- XY Planning Network: The XY tool allows you to search for paid financial advisors (more on this below) in your area. You can search by location and filter the results using various keywords and specialties.
Once you’ve shortlisted a few names, check them out on BrokerCheck.com and with him National Stock Market Commission. There, Steeno says, “you can see how long they’ve been in business or if they’ve had a disciplinary history.”
2. Check the credentials of a financial planner
There is no single “financial planner” license or certification. As Steeno says, “Just about anyone can call themselves a financial planner.”
To ensure you choose a professional with experience and knowledge, look for professional designations such as CFP®, CFA, or CIMA. These are just a few credentials a financial planner can look for, each indicating a different specialty or skill set.
Here’s a look at some of the credentials you might see:
- PPC®: A PIC® is a CERTIFIED FINANCIAL PLANNERTM. These professionals must have a bachelor’s degree, a minimum of three years in full-time financial planning, and complete a board certification program. CFP®s are also required to take 30 hours of continuing education every two years.
- CFA: CFA Professionals must take a three-part exam focused on investment tools, assets, wealth planning, and portfolio management to become certified.
- CAM: Professionals with a CIMA designation are Certified Investment Management Analysts. CIMAs are required to have three years of financial services experience and enroll in a CIMA education course at the Yale School of Management, the Wharton School of the University of Pennsylvania, the University of Chicago Booth School of Business, or the Investment Management Research Program. in Australia.
- MRFC: An MRFC is a Master Registered Financial Consultant. These professionals need at least four years of full-time financial planning experience, have a bachelor’s degree in accounting, economics, or finance, and complete 40 hours of continuing education each year.
- ChFC: ChFCs are licensed financial consultants. They must have at least three years of full-time business experience, complete 27 credits of coursework, and receive 30 credits of continuing education every two years.
- CDN: This is a certified retirement counselor. They must have two years of professional retirement planning experience, pass a specialized certification exam, and take 15 hours of continuing education courses per year.
You can usually find a planner’s credentials listed after their name, both in the online search resources in Step 1 and on their professional profile or LinkedIn account.
3. Review fee structures
There are many ways a financial planner can charge you, so make sure you understand how they charge before you work with them. Some services are charged based on the assets or investments the planner manages, while others charge flat fees or receive commissions. How they charge can influence how much you’ll end up spending to work with a financial planner, so it’s always important to research this part beforehand.
Here’s a look at some of the various fee structures financial planners use:
- only fee: Fee-only planners are paid for the services they provide. This could mean an hourly rate, a flat fee, or a retainer of some sort. Paid planners do not receive commissions or kickbacks from the products and policies they recommend.
- AUM: Assets Under Management is another pay-only approach. With this fee structure, you’ll pay a fixed percentage of the total assets your planner manages.
- Commission: Commissioned financial planners are compensated based on the products they sell you. This can create a conflict of interest, as it motivates them to recommend certain products, even if they are not better suited to their needs.
- Based on rates: A fee-based model is a combination of fee-only and commission structures. You may pay a fee for the planner service and they may also receive a commission for certain products they recommend to you.
Generally speaking, most professionals recommend looking for someone who only pays a fee, as this ensures that they have your best interests in mind. This includes AUM-based models, which motivate the planner to grow their assets (and avoid losses).
“It ensures that the adviser’s interests are aligned with yours,” says Steeno. “They want their assets to appreciate in value just like you do.”
Online financial planners vs. traditional planners
You don’t have to meet with a financial planner in person to get professional help. Many financial planners offer online services that allow you to get the guidance you need without leaving your home. These typically include phone calls and video calls, where you “meet” your planner virtually via Zoom, Skype, or another similar service.
These may be a good option if you want faster, more convenient service or to work with a planner that is not in your geographic area.
there’s also robotic advisors, which can be used to create and manage your investment portfolio. They are generally more affordable than using a real-life advisor and have low opening balance requirements, but they are also less comprehensive and personalized. Automated advisors will generally not help with budgeting, estate planning, tax planning, or other non-investment services.
Like Rob Burnette, an MRFC and CEO of Outlook Financial Center in Troy, Ohio, explains: “Robotic advisors are only useful for the investment part of a financial plan.”
In some cases, robo-advisors may include interactions with a live advisor (sometimes for an additional fee). But they’re typically not a dedicated account professional, and you may be limited in how many times you can interact with them. This means less consistency and personal guidance than you would get from a financial planner you hired directly.
“Robotic Advisors generally offer a one-size-fits-all solution,” says Kris Maksimovich, CRC and President of Global Wealth Advisors based in Lewisville, Texas. “They lack personalization and information and offer no help during periods of market volatility.”
The bottom line
A financial planner can help you achieve your long-term goals, but choose yours carefully. There are many types of financial planners, and their specialty, costs, credentials, and services should play a role in your decision.
Don’t be afraid to interview some candidates. Set up introductory meetings with two or three professionals and use the time to ask questions, understand their processes and fees, and make sure you’re a good fit before moving forward.