What to Look for in a Certified Financial Planner

It goes without saying that the financial choices you make today will have significant impact on your own future and that of your loved ones. If you’ve decided that a Certified Financial Planner (CFP) could help you reach your long-term strategic goals, now is the time for an in-depth review of how they work and why one might be a better fit than another when it comes to addressing your unique financial situation.

Factors to Consider When Selecting a CFP

Regardless of whether you need some basic advice or are looking for more-comprehensive financial planning services, you should know the following things about the CFP you choose.

• Credentials. Some planners may have additional credentials—they may be certified public accountants or hold IRS preparer tax identification numbers, for example—that let them assist you in other ways. Visit the Financial Industry Regulatory Authority (FINRA) to review the various financial planning designations, to understand their meanings and to see the qualifications that are required for each.
• Area(s) of specialization. Not all CFPs are experts in the same areas of financial planning. Depending on your circumstances, you may want to find a CFP who has greater experience in one or more of the following fields: estate planning, insurance planning, investment planning, tax planning or retirement planning.
• Fee structure. Your financial planner may be either a fee-only or a fee-based advisor. Fee-only advisors are paid a flat fee, an hourly rate, a retainer, or a percentage of assets under management (AUM). They do not receive commissions for selling products (unlike fee-based advisors). Since fee-based advisors can make money by recommending certain products, they may not always be working in the best interest of their clients.

Questions to Ask During the Interview Process

In addition to the above list of factors to consider when selecting a financial planner, there are some specific questions to ask when you first meet with a CFP that will help you find the one who is the best fit for your situation.

• What do they charge? You should expect to pay anywhere from $200 to $400 an hour, depending on the planner’s level of experience and the complexity of your situation, or you may pay a flat fee, such as $2,500, for a comprehensive plan.
• What services do they offer? Some professionals will offer a plan that considers all aspects of your financial life, while others may take a more limited focus or even offer a one-time consultation of your current financial situation. They may also sell products like investments and insurance in addition to preparing your financial plan.
• Do they have any criminal or disciplinary history? You should feel comfortable asking about the planner’s history, but free reports on financial advisors’ disciplinary status also are available from the U.S. Securities and Exchange Commission, securities regulators within your state, and FINRA.
• Do they have a minimum investable assets requirement? Creating a financial plan can be time-consuming work. Some planners require clients to have a specific amount of investable assets in order to work with them.
• How frequently will they meet with you? It may take several initial sessions to set up your financial plan, but once it’s in place you also will need regular reviews. These can happen annually, quarterly or more often if you have a significant life event occur. Finding out the frequency of those meetings will help you set expectations.

Selecting the Right CFP

You have several options when it comes to locating CFPs. You may want try any or all of the following to find candidates.

• Use the search option of the CFP Board of Standards, Inc.
• Get a referral from someone you know.

Maybe you’re wondering, “What is a financial planner and why do I need one?” We have your answer here. Once you’ve answered that question and are ready to find the right CFP for you and your needs, be sure to do your research and ask them questions before agreeing to work with them. If you choose wisely, your CFP will be committed to working in your best interests to help you achieve your financial goals.