How to Find a Financial Planner That’s Right For You

By Kelly Hodges
Employing a financial planner is a big decision, and the process of choosing one deserves some careful thought and investigation.  After all, this person will be advising you on issues of insurance, taxes, cash flow, retirement planning, investment planning, and estate planning, among other things.  Ideally you would like to have a planner you can “grow old with,” for the longer your relationship the deeper that person will understand you, your risk tolerance, your life goals, and your financial goals as well.

The first thing to know is that there are different types of certifications that a financial planner might hold.  You need to research the qualifications of the financial planners you are considering to make sure that they have the education and background to help you make the best decisions.  Here are a few of the more common designations and what is required to achieve them.  But recognize that there are others out there as well:

1.   Certified Financial Planner® (CFP)- These professionals have completed qualifying work experience and passed a certification exam by the Certified Financial Planner Board of Standards, Inc.  They must meet ongoing certification requirements to maintain their certification.

2.  Chartered Financial Analyst (CFA)- The CFA Institute awards this charter to candidates with at least 3 years experiences after passing a series of examinations.

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3.  Chartered Financial Consultant (ChFC)- This charter requires coursework, completion of an exam, and at least 3 years of experience and is administered by the American College.

4.  Chartered Retirement Planning Counselor (CRPC)- This designation is given to those who have completed coursework and passed an exam through the College for Financial Planning.  They must complete ongoing education to maintain the charter.

The next thing to understand is that there are 2 broad categories that financial planners fall into:

1.  Fee Based.  A fee based financial planner charges a fee for her services.  The downside obviously is that you need to pay up front for the advice, and unfortunately the fees are not small.  Likewise the most sought-after planners have the highest fees, and those just starting out in the field with less experience may be more reasonably priced.  That being said, a fee based financial planner is being paid by YOU to work for YOU, and therefore will have YOUR best interest in mind.  They are not trying to sell you any particular stock, bond, insurance policy, or annuity.  You can have piece of mind that their advice will be objective, because they don’t stand to gain themselves from the products they recommend to you.  Due to their complete objectivity, a fee based financial planner is usually the best way to go.

2.  Commission Based.   A commission based financial planner does not charge a fee for his services.  This aspect is appealing for many since it eliminates the need to shell out hundreds (or even thousands) or dollars for this service.  However, this is a great example of how nothing in life is free.  Yes you will be spared having to write out a check up front, but you may pay in many other ways down the road.  Think of the commission based type as salesmen disguised as financial planners.  In order for them to make money, they need to sell you policies that they will make commission on.  This potential conflict of interest may cloud their objectivity and make it difficult to confirm that their recommendations really have your best interest at heart.

The last and arguably most important step in this process is setting up appointments to meet in person and interview several financial planners.  You are not hiring a dog walker where pretty much anyone will do; there is a lot at stake for you in this decision so you want to invest some time in this process. Seek input from trusted friends or colleagues who already utilize a financial planner.  A personal recommendation is so much more meaningful than a random stab at the yellow pages.  Once you have a few names, go and meet with them to test out the rapport.  You need to feel comfortable with this person and confident that they will help guide you down the right path.  You want to know their personal financial philosophy to see if it is aligned with your own, and hear their specific ideas about how they can help you meet your financial goals.

When all the work is complete and you’ve found a financial planner that’s right for you, take a moment to celebrate!  Then check back for the next post to see some of the specific advantages you’ve gained now that you’ve made a financial planner part of your financial plan.


Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of her employer or any other person or entity.

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