Type the words “financial planner” into your search engine and you’ll get well over two and a half million hits. Face it – many people (perhaps even most people) would benefit from the services of a qualified financial planner, but when it comes to selecting the right one, we’re stumped.
Make no mistake: choosing the “right” planner or adviser to guide you through the financial wilderness is essential. That’s because, in the area of personal finance, every one of us is unique. We’re all at different stages of life. We each have different tolerance for risk. Our family situations vary widely as do our retirement dreams. Considering the array of variables, how do you pick the financial adviser or planner who’s right for your particular situation?
Recently we came across this article from Kiplinger in which freelance financial writer Laura Gariepy takes a stab at answering that question. (Elsewhere on the Blog this week, we’re offering a related article discussing how much you should be charged for a planner’s services.) Gariepy’s premise is simple. “Not all advisers are created equal,” says Kiplinger. “From verifying credentials to trusting your gut, follow these rules to find a financial adviser.
We should point out that much of Gariepy’s advice is going to require effort on your part. But with your financial security at stake, we’d say the benefit is well worth the effort.
A Financial Adviser is Essential as Life Gets More Complicated
The older we get the more complicated our finances seem to get, says Gariepy: “You have assets to protect (and continue to grow), taxes to optimize, a legacy to leave and more. It makes sense to seek help to ensure everything is done correctly.”
But that said, she recognizes that finding the ideal financial adviser is “easier said than done,” especially with so many qualified professionals out there and so little guidance about the best fit for you and your situation.
“Keep reading for a step-by-step approach to finding and vetting a financial adviser,” she writes. “That way, you can start working with a professional with a background and skill set tailored to your needs today — and reap the rewards long into the future.”
Step 1: Understand Your Own Needs and Preferences
The first step in asking for help is always going to be understanding exactly what kind of help you need. Before you start looking for a financial adviser, Gariepy encourages you to make a list of everything you want them to do for you.
“You might need help with managing your retirement income in the most tax-efficient way [or with] planning your legacy,” she writes. “You might need someone to help select the right insurance policies for your future, such as long-term care coverage. You may need assistance growing your assets in a way that feels safe and sustainable.”
She also advises making a list of must-have characteristics and personality traits. “For instance, you might want a fiduciary (someone who will work in your best interest, not their firm’s) who is warm, a great listener and funny,” she adds. After all, personal chemistry definitely matters.
Step 2: Ask Your Friends and Make Your Own Search
You can give yourself a much-appreciated shortcut in the search process by asking around to your trusted friends who are in similar financial situations. Ask them for referrals and be sure to press for their candid opinions.
But that doesn’t always yield actionable results, so Gariepy writes, “If you can’t find a financial adviser via word-of-mouth, run searches on the CFP Board and National Association of Personal Finance Advisors (NAPFA) websites. You’ll receive pre-vetted listings of professionals in your area, sparing you from the hassle of searching on Google.”
Step 3: Make Sure Candidates Have the Right Credentials
Once you have a solid list of contenders, Gariepy says, it’s time to start the filtering process.
“The first step is to verify their credentials,” she writes. “For instance, if they claim to be a certified financial planner (CFP®), you can check their status on the CFP Board website. Search results will also reveal whether the adviser has ever been disciplined by the board or declared bankruptcy within the last decade.”
Step 4: Check Online Sources to Gauge Their Expertise
Not all financial advisers are created equal, and many specialize in certain specific fields, age groups, or financial situations.
“They might also specialize in taxes, estate planning, investing or other financial areas,” Gariepy writes. “You’ll want to partner with someone with deep expertise in the situations and concerns associated with your life stage and goals.”
To gauge where their strengths lie, Gariepy suggests carefully reviewing their company website, professional social media presence (such as LinkedIn), and any other relevant work they’ve shared, such as books, talks, or research papers.
“Look at the language they use,” Gariepy suggests. “Does it resonate with you?”
Step 5: Check References and Scour Online Reviews
And now it’s time to dig into whatever you can find online. Or, as Gariepy puts it: “At this stage, Google is your friend.”
Search for each adviser on your list and see what pops up in the search results. Certain specific platforms can give you more details, like the Better Business Bureau, Trustpilot, Yelp, or even your local Chamber of Commerce.
“Read several reviews, testimonials and note any patterns, positive or negative. Generally, you’ll want to see a long history of happy clients,” Gariepy writes.
Step 6: Interview the Advisers You’re Interested In
After you’ve whittled your list down to the closest matches, it’s time to reach out. Call their office or use the online form on their website to start the conversation. “You shouldn’t have to pay anything to learn more about their practices,” Gariepy adds.
She provides the following list of things you should ask them about in your first chat. We’ve included the list here verbatim from her article:
*Credentials. What makes them qualified?
*Usual clientele. Are they like you?
*Services. Do they offer what you need, such as comprehensive financial planning, tax preparation or investment management?
*Investment philosophy and strategy. Does it align with your goals and make you feel comfortable? Are they a fiduciary?
*Accessibility. Is it easy to reach them? How often will you meet?
*Performance. What does a real-world example portfolio look like? What’s the dollar value of the assets they’re managing?
*Fees. Do they charge per hour, per service or based on your portfolio size?
*Disciplinary history. Have they gotten in professional trouble for dispensing questionable advice or acting unethically?
*Succession plan. Do they have someone in place to take over in case you outlive their career?
If you’ve done your research ahead of time, the odds are good that you’ll already have the answers to these questions, but Gariepy encourages asking them anyway so you can check for any inconsistencies in their replies.
“Pro Tip: Believe your gut,” she adds. “If it starts waving red flags, move on to the next name on your list.”
Step 7: Do a Side-by-Side Comparison of Top Picks
You’ve hit the home stretch now! The last step according to Gariepy is to compare your top two or three options side-by-side. Pay special attention to key details such as services, fees, performance, and investment strategy. You could even use a table to make this task easier.
“Which adviser has the edge?” Gariepy writes. “If they all seem the same on paper, which professional made you feel most comfortable and confident when interviewing them?”
When you select a winner, book your initial appointment. And don’t feel compelled to stick with the same adviser forever. If you ever become dissatisfied with the relationship, you can always change to a different professional.
Step 8: Think of Financial Planning as a Team Effort
In her conclusion, Gariepy reminds us that we don’t have to hire just one person to handle all of our financial needs, although that’s certainly an option.
“You might have met several qualified professionals during your research, each with their expertise,” she writes. “If that’s the case, you might want to build a team that supports various aspects of your financial life, such as taxes, estate planning, insurance and overall planning.”
If all has gone to plan and with a solid professional—or team of professionals—behind you, you’ll be well on your way to a healthier financial future.
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(originally reported at www.kiplinger.com)