How to Choose a Financial Planner

by Team Dinks on April 18, 2012 · 0 comments

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(Guest Post by Kaitlin Timmer)

If you’re at this step, you’ve already decided that you need one. Whether you’re nearing retirement and wanting to make sure you’re saving enough, trying to figure out the best way to save for your children’s college, or just looking for a check up to see how you’re doing, a financial planner can be a huge help.

I may be biased, but I think that most people should see a financial planner at least a couple times in their lives. Many things you can learn on your own, but finances can be confusing, and sometimes you just need a second pair of eyes to look at your finances for you. It doesn’t hurt if that pair of eyes has years of experience working with people like you. So now that you’ve made the decision to see an expert, here’s how you choose one that’s right for you.

1. Make sure he (or she) works for a fixed fee

Some “financial planners” are really just insurance or annuities salesmen in disguise. Many so-called financial planners earn a commission on what financial products they can sell to you. In other cases, they charge a percentage of the money they invest for you. This may not seem like a bad thing, especially if you don’t have a ton of money to invest, but it can lead them to invest too much of your money in certain investments even if it’s not the best place for your money to go. Double-check that your financial planner works for a fixed fee (either hourly or a flat rate), and that they don’t earn commissions.

2. Check if your planner is certified

The most common certification is a CFP: Certified Financial Planner. There are also CFAs (Chartered Financial Analysts), and ChFCs (Chartered Financial Consultants). CPAs (Certified Public Accountants) also do financial planning. There isn’t necessarily one best certification, but make sure your financial advisor is certified. If your planner claims to have a certain certification, you may want to do a quick web search to find out if it’s accurate. For example, you can check if someone has a CFP certification by searching for them at the CFP website.

3. Make sure you feel comfortable with him

It’s important to feel comfortable with your financial advisor. You’re going to be entrusting them with one of the most important things in your life—your money—so you have to feel like you can trust them and that they’re on your side. If they’re trying to sell you things or talk you into investments that you’re not comfortable with, it’s time to find a new financial planner. You also want someone who sees you as an individual, rather than trying to give you a one-size-fits-all solution. They should help you achieve your goals, not tell you what goals you need to have.

4. Ask about her specialty

A planner’s specialty is another thing to look at when you’re shopping for advice. You probably have a specific goal in mind that you’re hoping to achieve. If they specialize in estate planning and you’re looking for a guide on how to get out of debt, you might be disappointed. Most personal financial planners will have at least a basic understanding of all areas of your finances, but it’s best to pick one who specializes in what you’re trying to accomplish.

5. Find him from a reliable source

One of the best ways to find a financial advisor is to get a recommendation from someone you trust. Ask friends and colleagues if they can recommend a good one. If none of your friends have any recommendations, you can find one online. Check out http://www.napfa.org/. The drawback of finding one online is that you don’t know much about them, so ask for references from past clients. Satisfied clients are the best sign of a good financial planner.

An important thing to remember is that if you don’t like the service you’re getting, you can leave at any time. If they give you bad advice, lose you a bunch of money, or don’t listen to you, you can always find a new financial expert. Just keep in mind that nobody can accurately predict the economy 100% of the time, and it’s normal for your investments to take a hit in a recession. But there’s a difference between a poor market and your planner making poor financial decisions on your behalf. Stay informed, ask a lot of questions, and don’t be afraid to switch planners if you think it’s necessary.

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Kaitlin Timmer is a staff writer for Lifed where she writes about life hacks, health, finance and productivity tips.

Photo by Keoni Cabral



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