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How to Choose a Financial Planner

A financial planner is a type of financial advisor who can help you set and meet long-term goals like saving for your children’s college education, retiring by a certain age or planning out your estate. Some financial planners double as investment advisors, which means they can also help you with your investments. However, choosing a financial planner can take some time, as you want to ensure you’re making the right call for you and your family. If you want help finding a financial advisor or planner, consider using SmartAsset’s free matching tool.

Understanding Financial Planning Services

Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. This can involve multiple areas of finance, from investing and retirement to taxes, your estate, insurance and more. Financial advisors who manage investments for clients often double as planners themselves, offering their services on a standalone or recurring basis.

Identify Your Needs

Understanding what you’re hoping to accomplish by hiring a financial planner is a critical first step in finding the right professional to work with. A person looking for a money manager has different needs than someone who is looking for a holistic financial plan that touches on retirement planning, philanthropic giving and tax planning.

Your financial planning needs may encompass a variety of topics, including:

  • Retirement planning
  • Education saving
  • Debt analysis
  • Estate planning and trust creation
  • Philanthropic giving
  • Insurance needs
  • Tax planning
  • Business exit planning

By assessing your financial situation and identifying your personal needs, you can narrow your search for a financial planner and hire the right one. For instance, if you need specific help creating a trust and planning your estate, you’ll naturally want to hire an advisor who offers estate planning services. If you’re looking for someone to manage your money, in addition to creating a full financial plan, you’ll focus your search on advisors and/or firms that offer comprehensive wealth management.

Research Potential Financial Planners

How to Choose a Financial Planner

Once you’ve determined what kind of services you need from a financial planner, you can begin to compile a list of potential candidates. SmartAsset’s free matching tool can pair you with up to three advisors in a matter of minutes after taking into consideration your time horizon, income and a number of other factors.

Perhaps you limit your search to advisors in your area or rely on the recommendations of friends and family. You can also use online databases to find advisors in your area. Here are several services to consider:

  • Garrett Planning Network
  • XY Planning Network
  • National Association of Personal Financial Advisors
  • Financial Planning Association

When you’ve put together a short list of potential planners, you’ll want to start looking into their backgrounds, levels of experience and any certifications they may have. Here’s a look at some of the most common financial certifications:

  • Certified financial planner (CFP)
  • Chartered financial analyst (CFA)
  • Accredited investment fiduciary (AIF)
  • Certified public account (CPA)
  • Chartered financial consultant (ChFC)

When researching individual financial planners, be sure to visit their firm’s website to see what kinds of services they offer and whether they align with your needs.

Financial planners who are registered with the U.S. Securities and Exchange Commission (SEC) must submit documentation each year about their business, which can also be helpful to examine. This paperwork, known as Form ADV, will include the firm’s services, fees, investing strategies and more. Form ADVs also list disclosures of any legal or regulatory infractions the firm and/or financial planner has on their record. Depending on the seriousness of the disciplinary action, a disclosure may deter you from working with a particular advisor.

Examining a Form ADV may seem overwhelming at first, but it’s an essential step to take when choosing an advisor. SmartAsset’s Form ADV guide can help you navigate and make sense of these regulatory documents.

Interview at Least Three Financial Planners

Now for what is likely the most important step of the process: interviews. After putting together a short list of candidates, arrange a time to meet or speak with each one. Most advisors offer consultations, during which they will introduce themselves, talk about what they can offer you and address any questions you may have.

Even after researching the individual and their firm, be sure to ask about their fee structure, financial planning approach, how many clients they work with, and whether they are a fiduciary. Advisors who are registered with the SEC have a fiduciary duty to always serve their clients’ best interests. Knowing that a financial planner abides by fiduciary duty can give you the peace of mind knowing that your advisor has to put your interests first.

When choosing a financial planner, be sure to interview at least three candidates. You may be tempted to hire the first person you meet. However, speaking with at least three financial planners and comparing those conversations can provide important context in your search.

Bottom Line

How to Choose a Financial Planner

Working with a financial planner can help you secure your financial future and reach your goals. Whether it’s retiring, buying a home or sending your kids to college, planning ahead is super helpful. The foundation of your search should be understanding your own personal needs and finding a planner who suits them.

When the time comes to make your decision, you’ll have a lot of information to consider. Ultimately, though, you’ll want to choose the financial professional with whom you feel most comfortable with. Trust is a critical component of the advisor-client relationship, so finding a professional who you can trust is vital. After all, this person will be playing an important role in your financial life.

Tips for Choosing a Financial Planner

  • Need help finding a financial planner and don’t know where to start? Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Consider the fees that a financial planner charges for his or her services. For instance, fee-only planners only earn money from the fees they charge clients. Fee-based advisors, on the other hand, also earn commissions from selling products. This can create a conflict of interest, because commission-based compensation can incentivize advisors to recommend certain products or services for the purpose of generating a commission. Be sure that your advisor abides by fiduciary duty.

Photo credit: ©iStock.com/SDI Productions, ©iStock.com/SDI Productions, ©iStock.com/Ridofranz

Patrick Villanova, CEPF® Patrick Villanova is a writer for SmartAsset, covering a variety of personal finance topics, including retirement and investing. Before joining SmartAsset, Patrick worked as an editor at The Jersey Journal. His work has also appeared on NJ.com and in The Star-Ledger. Patrick is a graduate of the University of New Hampshire, where he studied English and developed his love of writing. In his free time, he enjoys hiking, trying out new recipes in the kitchen and watching his beloved New York sports teams. A New Jersey native, he currently lives in Jersey City.
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