Choosing Financial Planners
- Determine Need
- Learn Code of Ethics
- Ask for Referrals
- Learn Pay Structure
- Interview Several Planners
Choosing a financial planner or financial advisor can be easy because they’re everywhere. However, finding a finance planner who’s good and meets your needs may be a little more difficult. Sifting through lists of financial planners is going to be more difficult than choosing mouthwash or clothing. After all, this professional is going to be working with your money, so you want him or her to be a good fit. Here are 5 tips on choosing financial planners.
Related Resource: 50 Best Online Master of Finance Degree Programs
Determine Need
Not everyone is in need of financial planners or financial advisors. Just because you have a few extra dollars each payday and want it invested doesn’t necessarily mean that you’re in need of a finance planner. Additionally, financial planners may not be interested in working with someone who doesn’t have a lot of money to invest. After all, they’re in it to make money as well. The individual contemplating hiring a planner should be able to put aside money every pay period. A good rule of thumb is that if you can save at least 20% of your annual income, you might be a good candidate for a financial expert.
Learn Their Code of Ethics
Every finance planner adheres to a specific code of ethics. Individuals trying to pick a finance planner should learn what code of ethics each candidate uses. The word “fiduciary” should come up in the planner’s resume or description. What this means is that they will make transactions that are in the client’s best interest and not their own. Financial planners who have obtained the right to use the Certified Financial Planner (CFP) credential are often some of the most dedicated planners. In order to earn the CFP, they must:
- complete a required training program
- pass a test
- keep up with continuing education
This is very important when choosing a financial advisor or planner.
Ask for Referrals
Finding a CFP can sure seem easy enough. All someone has to do is search the web or go through the phone book and plenty of names will pop out. Each of them will list their best attributes and make it look like they’re the perfect person. Pick a couple from the list. Google each name to see what can be learned about each. You can also go to Investment Advisor Public Disclosure or BrokerCheck. Both of these sites will provide readers with:
- the individual’s background
- experience
- any disciplinary action the planner may have received
This step often makes it much easier to choose the right finance planner.
Learn Pay Structure
Financial planners don’t all use the same pay structure. It’s important for people to learn what type of pay structure each potential planner uses. Some use a commission-based system while other use a straight, hourly rate. A financial advisor or player who gets money off commissions may lead the client into a direction that benefits the planner more than the client. This type of planner may not be the most unbiased either. Those who choose a flat rate are generally more willing to invest in various areas.
Interview Several Planners
When is it ever a good idea to choose the first thing or person we see? The same goes for choosing a financial advisor or planner. U.S. News & World Report indicates that it’s very important to interview more than one finance planner. You should talk to every planner you’re considering and ask each one the same questions. This is the best way to compare them and make an appropriate choice.
Conclusion
Having a financial advisor or planner working with an individual’s money can prove to be very beneficial but only with the right planner. Following these simple tips will hopefully make it easier to choose the right financial planner. It may also be the start of a very rewarding and lucrative relationship.
Related Resources:
