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 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.

What Is Financial Planning?

Financial planning is a process that helps individuals and families map out their financial goals and create a structured approach to achieving them. This can involve multiple areas of finance, from investing and retirement to taxes, your estate, insurance and more.

A financial plan typically begins with an assessment of current financial health, taking into account income, expenses, assets, and liabilities, followed by identifying both short- and long-term financial objectives.

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

A woman shows a brochure to another woman.

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 who serve your area in a matter of minutes.

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 that financial advisors and financial planners pursue:

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.

Vetting Financial Planners

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.

Understand Financial Planning Fees

Financial planning fees can vary widely depending on the advisor’s pricing model and the specific services offered. Many financial planners charge either a flat fee for a specific plan or an hourly rate for ongoing consultations, allowing clients to pay for only the guidance they need. Others may use a retainer model, charging a set monthly or annual fee to provide more continuous advice and support.

For clients looking for both investment management and comprehensive planning, many advisors bundle financial planning into their asset management services. In this case, the financial planning advice is often included in the annual percentage fee, creating a more holistic advisory relationship without separate charges. It’s also worth noting that some advisors work on a commission basis, earning fees from the financial products they recommend.

So how much are these fees? According to the Kitces report, “How Financial Planners Actually Do Financial Planning,” the median rate for hourly service was $250 in 2022, while the median cost of standalone planning was $3,000.

Interview at Least 3 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

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 financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel 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 and services. 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.