How to find a financial planner
Managing money can be a daunting task. Monitoring retirement and investment accounts can sometimes seem like a full-time job, and that’s in addition to the responsibilities many men and women already face with regards to their careers and families.
To combat the sometimes confusing and intimidating nature of money management, many people enlist the help of financial planners. Financial planners can help men and women navigate the plan for retirement and help them prepare for unforeseen events that can affect their finances. Finding the right financial planner can be similar to finding a physician; just like you don’t want to trust just anyone with your health, you also don’t want your finances in the hands of someone you don’t trust. The following are a handful of tips for men and women as they look for financial planners who they can be comfortable with for years to come.
• Choose a certified planner. Many financial professionals claim to be planners, but only those men and women who are certified financial planners, or CFPs, are licensed and regulated. CFPs must take various classes with regard to financial planning and pass an exam administered by the Certified Financial Planner Board of Standards. In addition, a requirement to maintain their designation as CFPs is that, once certified, CFPs continue their education so they can stay abreast of the latest industry trends and developments. While CFP status does not guarantee a given planner will meet your needs, it’s a good place to start.
• Consider how a CFP earns his or her living.
How a CFP earns his or her living is another factor to consider. Commissionbased financial planners earn commissions when buying or selling a stock, while fee-based planners earn a percentage of your annual assets. Many people starting out prefer planners who earn hourly fees, feeling that such a pay structure makes them more comfortable and gives them time to build up a relationship with their planners.
• Work with a fiduciary.
Financial planners are held to two standards: the fiduciary standard and the suitability standard. The latter requires that planners give advice that suits investors’ objectives, while the former requires planners to give advice that puts their clients’ best interests ahead of their own. So what’s the difference? A planner beholden to the suitability standard can recommend the least suitable investment option (which may earn him or her more money) among a handful of suitable options, without having to report to his or her client any conflicts of interest, whereas a fiduciary is obligated to recommend the option that is best for the client.
• Be wary of boasts. Some planners will try to impress prospective clients with boastful talk of beating the market. Such boastfulness should raise a red flag, as it suggests a planner is more likely to roll the dice with your money than make sound investments.
Finding a trustworthy financial planner is a great way to grow your money.
But who to work with is a decision that requires careful thought and research.