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How to Choose a Financial Planner

Whether you're a 30-something just starting to make some real money, a Boomer, or just about to retire, you could benefit from a financial planner. The decision, much like choosing a doctor, or any other adviser is to be done with great care – to some extent, they hold your financial future in their hands.

Here's how to choose a financial planner

Start your search

In the best of worlds, you turn to family or friends who have had a wonderful experience and have a name of a financial planner they can share. Also look to professional associations like the Certified Financial Planner Board of Standards and the Financial Planning Association. Ask your attorney or accountant for references. Once you have a few names, dig up as much information about their background as you can. For starters, go on their website and do a Google search to see if their name pops up and in what context. If you want some guidance on choosing a planner you'll likely find these helpful, SEC Q&A on Investment Advisors, and Financial Planning Association.

"Even if the planner is employed by a national firm and works in a fancy office, do not assume anything," says Jon Ulin, managing principal of Ulin & Co. Wealth Management.

Get a copy of their ADV (part 1 and 2), which specifically discloses everything from where they attended college to how they charge and the services they provide. You can get copies of this form at the SEC Investment Adviser Public Disclosure search. You can ask your state securities regulator whether there are any complaints and ask them to check the Central Registry Depository. "Verify everything you can about the financial planner before engaging them. If they are pushing products or bragging about their market returns, they may not be the right person for you," he warns.

Sort out the alphabet soup

Ask what licenses they have. Believe it or not, there are more than 100 different initials financial planners can use, some of which can be earned with minimal study, and a nominal fee, says Ulin. When hiring a planner, there are only a few accredited designations that you should look for, which are regulated by the Financial Industry Regulatory Authority (FINRA). The most prestigious financial services designation, says Ulin is that of a certified financial planner, CFP.

"Anyone can hang a shingle on their door and call themselves a financial planner," says Ulin.

Know that with over a million financial, investment and insurance pros in the U.S., says Ulin, understand that almost anyone can call themselves a financial planner. Financial planning can be provided by investment advisers, insurance agents, accountant and even people who have no actual financial credentials. "Anyone can hang a shingle on their door and call themselves a financial planner," says Ulin.

What can you do for me?

Make sure to ask the planner if based on their licenses, whether they provide insurance and or investment services in addition to their planning services. "Some planners (such as CPAs, offer financial planning for a fee), may not have the ability to help you execute their recommendations and may be getting kick-backs from other professionals they refer business to," warns Ulin.

Not all advisors provide the same level of advice. "Get to know and understand their process. How does the advisor make decisions regarding investments? Is it one person or a team making decisions?" asks Derek Holman, managing and co-founder of EP Wealth Advisors. "Make sure your financial advisor is objective, preferably advising you in a fiduciary capacity," says Holman. The law requires that a fiduciary put your interests ahead of theirs.

Check them out

They can talk a good game, but put it to the test. "How did this planner's clients do in the last market downturn and what does this planner say about protection from the next market downturn?" asks David Alemian, a retirement planner.

Are there any open or settled complaints filed against them? The planner may dodge such questions or indirectly answer if in fact there is a red flag on their record. "Do a thorough background check. Do not assume anything. Go to the FINRA broker check,, to verify their employment history and review if they have a record of any complaints filed against them," says Ulin. If there are a few complaints filed against the broker, you likely don't want to go there.

What about fit?

What is their experience with people like you? If they only deal with gazillionaires and you're hardly in that category, they may not be a good fit. You want someone familiar with your issues, concerns and income bracket. Otherwise, you may be considered second fiddle and not receive the care and attention "top tier" clients receive.

A good fit also means they have experience in areas that are important to you. Some planners might focus on retirement or estate planning for example. See if their suite of specialties are priorities for you.

Ask too, about their investing philosophy. If they're gung ho, have a hefty appetite for risk, and you're the kind of guy who wears a belt and suspenders, or a gal who really prefers certificates of deposit but you're tip toeing into investing waters, then that planner is perhaps not a great match.

Talk money

A financial planner can be paid in a variety of ways, salary, hourly, flat fee, fee-based, or commission, for example. Get in writing how they will be compensated for financial planning services, in addition to products offered and sold. Financial advisors can charge for financial planning services on a hourly rate, a flat rate, or on a percentage of your assets and or income, explains Ulin. Financial advisors providing additional products can be either commission-based, fee-based, or a combination of fees and commissions received from products sold which are paid by a third party. You want full disclosure of all fees and costs. Fee-only advisers may have the fewest conflicts of interest because they aren't making money based on the sale of certain products.

Chemistry counts

Truth is, maybe they have all the credentials, you've checked their background in all the right places, talked to a few clients, but if in the end you don't know why but you're not "feeling them," trust your gut and say, "nice meeting you, thank you very much." and go on your merry way.

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Shorebreak   |     |   Comment #1
"Fee-only advisers may have the fewest conflicts of interest because they aren't making money based on the sale of certain products."

How to locate a "fee-only financial adviser":
paoli2   |     |   Comment #2
If the spouse who has handled all the finances, taxes, RMDs etc. passes first, and the other spouse is left to handle it all, would a Fee-only adviser be the best choice to take over all these duties or does he have to go to different people for everything?.  I would like to find a one choice for everything person .  Are there people who do these type of things for spouses who have never done it for themselves?  I am sure widows and widowers may encounter this a lot and wonder where do they go for help?  Thanks!
Anonymous   |     |   Comment #3
Not the person to go to first.

I would start with finding a reliable attorney.  Your spouse will need one to help him settle your estate anyway.  The attorney can then advise who he would recommend for other things that need done.  Good Attorneys have excellent resources available to them along with the "what to do" knowledge.
paoli2   |     |   Comment #4
#3  Hmmm.  An attorney??  Never thought to go that route first.  I have practically everything in our estate now that we no longer own a home, to not have to go through probate so may not need an attorney for much.  Maybe we should think of finding one for his other needs tho.  Thanks for the suggestion.
DA   |     |   Comment #6
Fee only advisers can also have a big conflict of interest.  Fee only advisers earn a fee based on how much of your money is under management.  They charge a fee on your money this year, and then a fee on the same money every year thereafter. Over time the fees add up more than you think. Do the math.
DA   |     |   Comment #7
Don't see why the Fee only is based on assets under management?  You can tell the advisor any amount of assets.
Anonymous   |     |   Comment #8
Typical "fee-only" advisers charge upwards of 1% on amounts up to a million dollars. Add the fees associated with many of the funds they often recommend and "fee" costs approach 2% per year. This math alone demonstrates why so many flocked to 3% long-term CD's. A worthy adviser has to earn about 2% on your portfolio just so you break even. Over time, adviser and fund fees are a cancer affecting countless portfolios. I've watched several portfolios linger under "management" of advisers who meet twice a year to tell you what you want to hear. The best is, "we all have market losses" as they dutifully collect their 1%.
Jonathan Ulin
Jonathan Ulin   |     |   Comment #5
Your planner should be able to clearly articulate how you can better improve, protect and maintain your overall financial health, wellness and sustainability before or after retirement. Your plan should be a SERVICE (like hiring a great fitness trainer) not a means to sell products. As we cover with our clients in Boca Raton at, it's a complicated world out there. Hire a planner that has over 5-10 years of real time experience, achieved accredited designations, has a clean track record, and truly cares about your financial welfare while providing you an ongoing, professional, consultative (and open-door) approach.

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