First, let us what is a financial planner.
What is a financial planner?
Simply put, a financial planner is a qualified and mostly certified professional who helps individuals and sometimes companies to meet their long-term financial goals by analyzing the status of our client, be that an individual or a corporation.
Financial planner usually specializes in a certain part of finances such as asset allocation, risk management, retirement planning and tax planning.
You might ask yourself how will you find yourself a financial planner that will do more good than harm. Well, you are in the right place.
You should always interview more than one financial planners as you will have more options to choose from. You should also ask some questions like their credentials, their references, financial planner fees, what level of service you as a client can expect, possible disputes, etc…
If a financial planner is representing himself a certified financial planner (CFP) he should have an accreditation with him all the times. You can check it over at CFP Board of Standards.
How to find a good, reputable financial planner?
There are loads of possible answers to this question.
Certainly, the most obvious one is to get references from friends, family or colleague that are valuable. One important thing to remember when getting references. Make sure the people you are talking to have similar or same financial objectives as you.
If someone has higher net worth he or she might be interested in a better service. Same goes for the other way.
There is also a second option. You could perhaps ask around to special groups who certify financial planners. Again, there is no guarantee in this world that your financial planner will be competent and smart with your money. But still, you, at least, get a good and a reputable source of a financial planner. In this case, you can check out Financial Planning Association and they have a cool feature that let you search for financial planners by their specialty or location.
Financial planner fees
When talking about financial planners and their fees, there are usually three basic billing structures.
Fee-only financial planners
First of all, there is fee-only financial planner. They charge only for the advice they give and they do not charge for possible earnings you may get from the advice he has given to you.
Sure, there are lots of advantages when going this route. You do not have to worry about possible additional charges and you have an exact figure of how much you will be paying for the advice he has given to you.
Moreover, when talking about fee-only financial planners, they can charge hourly, you can put him or her or an annual retainer or simply they can take a cut of your asset. It is up to you and your financial planner. Just make sure he or she is not trying to scam you. Be careful when signing something.
Fee-based financial planners
With them, it is really simple. They take commissions on products that they sell. For example, they can sell your a portion of a mutual fund or even a life insurance policy.
Commission-based financial planners
They take money from the products they sell.
Think of a commission-based planner as an affiliate for a certain brokerage or some other financial institution like a bank. The more accounts he or she open and the more money his clients spend, the more he or she will get paid.
In the end, a commission-based planner is only working for the brokerage he is affiliated with.
What questions should you ask a financial planner?
Since I mentioned it earlier in the article, now we are going to go through it, detailed. Make sure your questions are detailed and clear to understand.
What are your references?
If possible, get few references, they can be anything from a former colleague to long-term clients. If you can get a hold of anyone he mentioned, ask kindly how big what the investment gain or loss and how easy is it to get appointments.
How much experience do you have?
Say you need a financial planner to retirement. Now, a certified financial planner may have decades of working with clients, but he is not much of a use since he can not plan out your retirement. The key here is relevant experience.
Ask your planner what credentials he or she has and how did was he awarded with them.
What planning services do you provide?
For example, there is a huge difference between tax planning and tax preparation. Also, there is a huge difference between investment planning and retirement planning. When looking for the “perfect one”, make sure he is specialized in the are you have a particular interest in.
Are you selling anything and if you are, who is paying your commissions?
Say the financial planner you want to take is taking commission from a certain financial institution. Of course, knowing that is only half the story. You should ask him who is paying him so you can determine that you two can find the common interest.