Choosing a Financial Advisor to Help You Address Your Financial Planning and Wealth Management Needs
The terms financial planner, financial advisor and investment advisor are used by many different financial professionals. This can make it hard to find the right person to help you address your unique financial planning needs.
The number of different people who provide financial advice often confuses people. You really need to take your time when choosing a financial professional. Are you looking for a financial advisor who will put your needs and interests first and provide guidance for all of your financial decisions over the course of your lifetime? Are you looking for someone who can help you build, manage and preserve your wealth through objective planning? Are you looking for someone who is service oriented –or sales oriented?
When seeking a financial advisor, ask what qualifies him or her to offer advice about financial planning, investments, taxes, insurance, retirement planning or estate planning. As the number of people seeking financial advice continues to grow, it is important to know how to identify qualified professionals committed to competent and ethical behavior. Advisors who aspire to provide professional financial services have typically taken steps to complete an educational course of study at a college or university after which they must pass comprehensive examinations that test their knowledge. For example, candidates for the CFP designation must have a minimum of three years experience in the financial planning process in addition to the education and examination requirements described above prior to earning the right to use the CFP marks. The CFP marks are owned by the Certified Financial Planner Board of Standards, Inc. and are awarded to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFP practitioners must also agree to abide by a Code of Ethics and agree to provide their clients with objective financial planning advice and services. CFP practitioners must also follow certain standards – based on Financial Planning Practice Standards – which describe the process used during a financial planning engagement.
One way to find an advisor you can trust is by asking your friends, business associates and other professional advisors for a recommendation. Another option is to contact the Financial Planning Association (FPA) by telephone at 800.322.4237 or by visiting the FPA website for a list of CFP practitioners in your area. The Financial Planning Association (FPA) is the membership organization for the financial planning community. Its members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. FPA believes that everyone needs objective advice to make smart financial decisions and that when seeking the advice of a financial planner, the planner should be a CFP professional.
For information about CPA’s and other tax planning professionals, you can contact the American Institute of Certified Public Accountants' Personal Financial Planning Center.
For information about fee-only financial planners, you can visit NAPFA, the National Association of Personal Financial Advisors. NAPFA is an organization dedicated to the advancement of fee-only comprehensive financial planning.
To find out more about those who have the ChFC – Chartered Financial Consultant designation or other recognized professional credentials, visit the Society of Financial Service Professionals. Society members consist of qualified professionals who are committed to competent and ethical behavior.
Make an appointment to meet with a financial advisor and ask questions about his or her services, background, credentials, licenses and key areas of specialization. Do they provide comprehensive financial planning services process? This is the process of identifying goals, gathering and reviewing financial data and designing and implementing a plan to help you reach your life goals through the proper management of your financial resources. Or do they specialize in only one aspect of a person’s financial life, such as insurance or investments. Ask for a copy of the current firm brochure and the level of services provided. In addition, you can engage in a dialogue about your particular situation describing your need for their services. What do you want to accomplish? Are you interested in establishing a long-term relationship? Are they available to meet with you on a regular basis to assess your progress in relation to your goals and objectives?
Another matter to discuss with the practitioners you interview is their methods of compensation. How do they charge for the various services they provide? Are they compensated from products purchased, such as investments or insurance? Or do they charge a fee based on an hourly rate, flat rate per project, or based on the value of assets under management? Many firms receive both forms of compensation. For example, fees may be charged for the development of written strategic plans for solving specific problems and/or reaching specific goals. There may be a one-time fee for the initial plan development. If you choose to implement the plan, he or she may receive commissions from products purchased, such as insurance or securities.
The responsibility for providing professional services is a
very important relationship between you and your trusted advisor. It is
a relationship that typically involves an ongoing exchange of relevant
information. Since this relationship is vital to the overall success
and achievement of your financial objectives, you should feel confident
about the person you choose to work with. You should feel welcome in
his and her office. He or she should always be willing to take your
call.
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