How to choose a financial planner

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How to choose a financial planner

A financial planner is a type of financial advisor who can help you set and meet long-term goals, like saving for your children’s college education, retiring before a certain age, or planning your estate. Some financial planners also act as investment advisers, which means they can help you with your investments as well. However, choosing a financial planner can take some time, as you want to make sure that you are making the right choice for you and your family. If you need help finding a financial advisor or planner, consider using SmartAsset’s free matchmaking tool.

Understanding Financial Planning Services

Financial planning is the process of taking a holistic look at your financial situation and developing a specific financial plan to achieve your goals. It can involve many areas from finance, investing and retirement to taxes, your estate, insurance and more. Financial advisers who manage investments for clients often act as planners themselves, offering their services on a stand-alone or recurring basis.

Identify your needs

Understanding what you hope to accomplish by hiring a financial planner is an essential first step in finding the right professional to work with. Someone looking for a fund manager has different needs than someone looking for a holistic financial plan that touches on retirement planning, philanthropic giving, and tax planning.

Your financial planning needs may encompass a variety of topics, including:

By assessing your financial situation and identifying your personal needs, you can narrow down your search for a financial planner and hire the right one. For example, if you need specific help creating a trust and planning your estate, naturally you will want to hire an advisor who offers estate planning services. If you are looking for someone to manage your money, in addition to creating a comprehensive financial plan, you will focus your search on advisors and / or companies that offer comprehensive wealth management.

Find potential financial planners

How to choose a financial planner

How to choose a financial planner

Once you have determined the type of services you need from a financial planner, you can begin to put together a list of potential candidates. SmartAsset’s free matchmaking tool can match you with up to three advisors in minutes after considering your time horizon, income, and a number of other factors.

Perhaps you are limiting your search to advisors in your area or relying on recommendations from friends and family. You can also use online databases to find counselors in your area. Here are several services to consider:

When you’ve put together a short list of potential planners, you’ll want to start looking at their backgrounds, experience levels, and any certifications they might have. Here is an overview of the most common financial certifications:

  • Certified Financial Planner (CFP)

  • Chartered Financial Analyst (CFA)

  • Authorized investment trustee (AIF)

  • Chartered public account (CPA)

  • Chartered Financial Consultant (ChFC)

When looking for individual financial planners, be sure to visit their company’s website to see what types of services they offer and if they meet your needs.

Financial planners who are registered with the United States Securities and Exchange Commission (SEC) must submit documents about their business annually, which may also be helpful to review. These documents, known as Form ADV, will include the services, fees, investment strategies and more of the company. ADV forms also list disclosures of any legal or regulatory violations that the business and / or financial planner have on file. Depending on the severity of the disciplinary action, a disclosure may deter you from working with a particular advisor.

Considering an ADV Form may seem overwhelming at first, but it’s an essential step to take when choosing an advisor. SmartAsset’s Form ADV guide can help you navigate and understand these regulatory documents.

Interview at least three financial planners

Now for what is probably the most important step in the process: the interviews. After compiling a short list of candidates, set a time to meet or speak with each. Most counselors offer consultations, during which they will introduce themselves, talk about what they can offer you, and answer any questions you have.

Even after you’ve researched the person and their business, be sure to ask questions about their fee structure, their approach to financial planning, how many clients they work with, and if it’s a fiduciary. Advisors registered with the SEC have a fiduciary duty to always serve the best interests of their clients. Knowing that a financial planner is meeting their fiduciary duty can give you the peace of mind that your advisor should put your best interests first.

When choosing a financial planner, be sure to interview at least three candidates. You might be tempted to hire the first person you meet. However, speaking with at least three financial planners and comparing these conversations can provide important context in your research.

Final result

How to choose a financial planner

How to choose a financial planner

Working with a financial planner can help you secure your financial future and achieve your goals. Whether it’s retiring, buying a house, or sending your kids to college, planning ahead is very helpful. The basis of your research should be to understand your personal needs and to find a planner who is right for them.

When the time comes to make your decision, you will have a lot of information to consider. Ultimately, however, you will want to choose the financial professional that you feel most comfortable with. Trust is an essential part of the advisor-client relationship, so finding a professional you can trust is essential. After all, this person will play an important role in your financial life.

Tips for choosing a financial planner

  • Need help finding a financial planner and not sure where to start? Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool connects you with up to three financial advisors in your area, and you can interview your correspondents free of charge to decide which one is best for you. If you’re ready to find an advisor who can help you reach your financial goals, start now.

  • Consider the fees a financial planner charges for their services. For example, fee-only planners only earn money on the fees they charge clients. In contrast, paid advisors also earn commissions on the sale of products. This can create a conflict of interest, as commission-based compensation may cause advisors to recommend certain products or services with the aim of earning a commission. Make sure your advisor meets their fiduciary duty.

Photo credit: © iStock.com / SDI Productions, © iStock.com / SDI Productions, © iStock.com / Ridofranz

The article How to Choose a Financial Planner first appeared on the SmartAsset blog.


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