Locate your Financial Planner

Choosing a financial planner may be one of the most important decisions you make for yourself and your loved ones. A planner can play a central role in helping you meet your life goals and achieve financial well-being. It is important to take the time to select a financial planner who is competent and trustworthy, one on whom you can depend for professional advice and services.

Key points that need to be taken care before hiring a Financial Planner:

We all have different needs.

  • Know what you need. Not all planners offer comprehensive advice. Some focus on retirement, while others go whole-hog and cover everything from taxes to estate planning. Decide what you need and expect from your adviser.
  • Know what they actually do. Some financial advisers are actually tax accountants or insurance salesmen who decide to offer general investment advice to broaden their businesses. Consider their other incentives when they start to sell you a new tax strategy or insurance policy.
  • Interview, interview, interview. When hiring a planner, interview at least three pros. Don't shy away from asking them for referrals from clients and don't fall in love with the first one you meet even if he was recommended by your best friend.

Understand how your adviser gets paid. 

  • Find the fees. Some advisers are called "fee-only" financial planners because they don't receive commissions for any of the products they sell. Commission-based planners might not charge clients for office visits, but they receive compensation from the companies whose products they sell. Some financial planners have a hybrid fee structure. So-called "fee-based" planners can receive payments for some of the investment products they sell from the companies that created them, but most of their income derives from the fees they charge their clients. True fee-only planners are a relatively rare breed, so be sure to ask how an adviser is paid.
  • Understand the products. Ask about the breadth of products that the planner sells and if the compensation is different, say, for insurance products versus investments. Similarly, be wary of advisers who tend to push a narrow selection of products, for example, if they keep steering you toward one mutual fund family. No fund company offers the best funds in every style of investing.

What not to do when looking for a financial adviser.

  • Don't jump the gun. Just because you are offered a product or plan by the adviser you choose, doesn't mean you should buy the first investment product that the adviser offers. Advising is part of a conversation, so be sure to talk it out without asking about alternatives.
  • Don't be wowed by performance. Fancy charts and presentations play up an investment's performance should be understood for the market or time period. The investment may actually have under-performed, but still makes for a good chart!
  • Don't forget to check in. Be sure to set regular meetings with your adviser to make sure that your plan still fits with your goals. Regular, for some people, may mean just once a year at tax time; for others, quarterly is more appropriate.
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