How to Find a Good Financial Planner
Selecting a certified financial planner is one of the most important money decisions you’ll make. Here are the steps for finding a great one.
1. Consider Your Priorities
Nick Bormann, a CFP in Spokane, Wash., says that advisers
tend to specialize in a particular type of financial advice or focus on groups
of clients with similar financial issues—teachers, tech execs, middle-class
preretirees, etc.
So begin your search by identifying your key needs and goals.
If you want to dig yourself out of debt or boost your savings as you approach
retirement, seek someone with experience tweaking budgets and coaching clients
to live within them. If you’ve built up a nest egg but don’t know if it’s
enough to maintain your lifestyle through retirement, choose a planner with
experience projecting out long-term financial plans and allocating savings
among types of retirement investments.
2. Identify Planners Who Fit Your Needs
Almost anyone can call themselves a financial adviser. And
there’s a confusing array of formal accreditations, with an alphabet soup of
abbreviated titles to match. For simplicity’s sake, you really only need to
know one: CFP, or certified financial planner. You can count on a CFP to have
completed extensive training and passed a rigorous exam, and to be able to
advise you on a wide range of financial areas. Special titles, some more
meaningful than others, often get layered on top, such as certified college
funding specialist (CCFS).
You can find CFPs in your area by specialty at FPA
PlannerSearch, the National Association of Personal Financial Advisors, the
Garrett Planning Network, and the XY Planning Network. Those websites list only
planners who are so-called fiduciaries, which means they’re obligated to put
your financial interests above their own. To be extra sure, some experts
recommend asking your planner to commit to fiduciary status in writing.
3. Figure Out the Costs
Restrict your search to fee-only advisers, who charge for
advice and asset management and don’t receive commissions by selling you
financial products.
Fee-only advisers use a variety of payment models, says
Roxanne Martens, a financial adviser with CGN Advisors in Manhattan, Kan. Some
charge an hourly rate, which can range from $100 to $400. Many of the same
planners will charge a flat fee for a predetermined bundle of services—an
average of $2,400 to evaluate your financial life and map out a comprehensive
long-term plan, according to a 2019 study. These models tend to work best if
you’re looking for help with a specific issue or a plan that you’ll carry out
on your own, possibly with periodic check-ins.
Other advisers charge clients a percentage of assets under
management each year. Their rates generally range from 0.6 to 1.2 percent of
the portfolio size, annually. The percentage is often lower for larger account
balances, so this model is generally most cost-effective for investors with
more assets and more complicated financial lives. Some planners use only the
percentage model and—note—will take you on as a client only if your portfolio
meets their minimum.
4. Vet the Contenders
Once you’ve compiled a list of candidates, confirm their
credentials through the CFP Board. And make sure no disciplinary actions have
been taken against them by going to the Securities and Exchange Commission’s
Investment Adviser Public Disclosure site.
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