Choosing the Best Financial Planner

Planning & Saving
on June 6, 2012

Finances are one of the most important parts of a person’s life, since they dictate so many factors such as where the person can live, how new of a car he or she can afford and what types of food can be provided by the family. Sometimes, handling all of these decisions becomes overwhelming for one individual or a couple to handle; therefore, a financial planner is called upon. Being certain to hire a proper financial planner is absolutely crucial to success.

Checking for Certification
Many people may claim that they are capable of “financial planning,” simply because they know how to use a calculator and are able to create a worksheet on a computer program. However, be sure to find someone who is actually certified in this field. The official term for this position is a Certified Financial Planner (CFP). These individuals have taken classes and have earned a degree that has trained them to specifically handle all types of financial planning questions and situations. Much like a teacher is licensed to educate the next generation on literature and history, a CFP is licensed to educate the current generation on better ways to allocate personal funds.

While personality might seem as though it is an insignificant part of the equation, many people want a positive “bedside manner” in a doctor, so why should they not strive for a similar goal in a CFP? Chances are, clients will be with the CFP for the long haul, since constantly reiterating financial details to a new CFP would be rather time consuming and annoying. Therefore, making sure that there is a strong sense of rapport is crucial. Clients need to be comfortable sharing personal details of their financial lives with the planner, and they need to be open and willing to accepting financial advice from the CFP.

Furthermore, The Wall Street Journal’s article “How to Choose a Financial Planner” provides another important note regarding this topic of personality. The article suggests that prospective clients should concern themselves with how the CFP is paid. If the CFP is paid based off of commission as opposed to a salary or hourly fee, then there may be more incentive on his or her part to push clients toward certain options. Of course, this is certainly not true of all commission based individuals, but it is an important note to keep in mind. The client should feel as though the CFP has his or her best interest in mind and is not out only in search of personal success and pursuits. The article also states that the client should look for a fiduciary, which is a statement that says that the planner going to work for the client’s best interests at all times during the professional relationship.

Choosing a Reputable and Reliable Planner
While there are many reputable CFPs out there, there are certain to be some who have negative intentions as well. Interested parties can check with family members and friends to see who they use for their financial needs. Additionally, they can ask trusted lawyers or other professionals in the neighborhood who may know certified financial planners whom they can recommend. The Wall Street Journal article also provides some sources for finding reputable CFPs. Both the National Association of Personal Financial Advisors (NAPFA) and the Garrett Planning Network are recommended resources from the aforementioned article. Of course, the client still needs to be comfortable with the financial planner. However, the fear of accidentally hiring someone who is not certified or has a shady past is relieved, as both of these groups are coming from a reputable force. Since they are, indeed, groups, chances are an individual will find someone within these groups with whom they match up well.

Research, Research, Research!
Just as in high school and college, it is always important to conduct research in the “real world.” If the CFP is associated with a particular business or firm, check with the Better Business Bureau to see how that company matches up. Carefully scan for any problems that people had with the CFP or company and see how they were resolved. The Internet is a wonderful tool for researching people, so type the CFP’s name into Google, and see if any sort of information comes up. Of course, while the Internet is an effective method of conducting personal research, it can also be a mill of rumors and gossip. Be sure to supplement any Google searches by conducting a thorough check with the Better Business Bureau.

“How to Choose a Financial Planner” goes on to suggest that running a background check on the CFP is another way to ensure that his or her credentials are sound and safe. Asking for recommendations from other clients also helps to ease the mind in this venture into the world of financial planning.

Ultimately, the client needs to be comfortable with the CFP in a variety of ways from knowing that the individual is certified and capable of handling such tasks to feeling secure in sharing personal information and details with the CFP and accepting advice from him or her.

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