Choosing a financial planner is a good idea for people wanting to invest and save and grow their assets. If you have a specific financial goal in mind, they can give you great advice on how to achieve it.
One of the first things you want in your financial planner, is for them to be certified (CFP). That gives you peace of mind, because you know they are licensed and regulated, and have taken the proper classes regarding various aspects involved with financial planning.
Anybody can just put out a shingle and call themselves a financial planner. That doesn’t mean they are experts at all. To become a certified CFP they must pass very rigorous tests given by the ‘Certified Financial Planner Board of Standards’. They also must be committed to continuing education. If they have the CFP credentials, then you can have confidence in their advice.
Financial planners should never be confused with accountants or stockbrokers. Just because someone deals with finance in some area of their profession, it doesn’t mean they are qualified to give you solid advice for financial planning.
Financial planners usually make their living off commissions or hourly rates for services rendered. Another red flag, even if the person is a qualified CFP, is if they are working strictly on commission. These financial planners can be very biased in their advice, because they are depending on commissions, and may steer you toward particular products if it will benefit them.
That’s why a large number of today’s financial planners are only working on fees collected for their advice. They are independent planners who are not getting any cuts from fund companies or life insurers. They simply collect a flat fee, and then provide unbiased advice. This is the best way to conduct business, and something you should keep in mind.
When you find a financial planner who is certified, then they have the credibility you need. Again, stay away from commision-based planners. If this is your first time and you are not dealing with a boat-load of money, then an hourly rate could work better for you. Most of the time a financial planner who will advice you by the hour, is just starting out in their career. That also means they really want to do a good job, to get the word out that they are professional and highly skilled. However, there are still some very experienced advisers who will take on hourly work, simply because they like working with younger people who are only able to afford those rates. You just have to check them out.
Another thing to look for is a fiduciary. These advisers have pledged to always act in the best interest of their clients at all times. The ones who are not fiduciaries are many times held to a lower standard (sustainability standard). What that means, is that anything they might sell you only has to something suitable for you, and not necessarily an ideal product or something in your best interest. You should take note that this is a crucial issue, and make sure when you choose your financial planner, that that person is a fiduciary.
Run you own background check. This is easily done online today. You want to know if they have ever committed a felony, or if any regulatory body or any investment-type industry ever had them put under investigation. Ask them for references as well. All of these things should be done before you do business with them. After all, your finances govern your life, and you want the advice you get concerning it to be solid and reliable.
Validate their credentials. Get on Google and Google them. Find out who administers their designation, and the contact the administrator and verify if their credentials are valid.
If you follow the advice in this article, you should be able to choose the right financial planner, to help advise you on how to best handle your financial situation.