Work & Money

Finding a Financial Planner

For years you’ve managed your money well, but just now something has complicated your life. Maybe a substantial inheritance has come your way. Maybe you have a new medical challenge.  Perhaps you want reassurance that your money can last through retirement. Whose counsel would you seek? You might turn to someone who has given you good advice in the past like a friend or family member, or a financial planner.  

  • What to ask a financial planner?

What’s a financial planner?

It is a generic title,  and not in itself a credential.  (Other generic titles are “Financial Analyst,” “Financial Advisor,” “Financial Consultant,” and “Wealth Manager.”)

For financial planners to earn credentials they must be licensed to sell investments and licensed in each state where they conduct business. Then, to earn a professional designation, they take additional courses;  to maintain the designation they must satisfy continuing education requirements. The pathways vary for the 214 (yes, that many!) “Professional Designations” listed by the Financial Industry Regulatory Authority (FINRA). Want to know the meaning of the abbreviations after the financial planner’s name? Go to https://www.finra.org/investors/professional-designations. You’ll find the full name of the designation. “View Details” will show you the qualifications to earn the designation.

Why did you find this on FINRA.org? Because it oversees all securities licensing, administers the exams, and conducts disciplinary actions. 

How to find a financial planner

Ask people you know who they would recommend and why that person was of value to them. Ask a local attorney or accountant.  An internet search for “find a financial advisor” provides links to specialized databases. You can discover the background of whatever advisors you sourced at https://[email protected] and www.adviserinfo.sec.gov.  

What to ask a financial planner

1. “What types of investments are you licensed to offer your clients?”

2. “If your company has its own “brand” of investments, what percent of your clients own such investments?”

3. “How much of your practice is geared to retirement income and estate planning?”

4. Ask a question you know the answer to, to see how this person communicates. If you know the difference between Exchange Traded Funds and Mutual Funds, for instance, you can judge if their explanation is clear, or if they are condescending to you.

5. “What is your process for analyzing my situation and developing recommendations for me?”

6. “If you make a mistake or an investment did not work out as you expected, what do you say to me?”

7. “Do I pay for your advice through fees or commission?”

Fees can be charged to design a financial plan and/ or for hourly consultations. Annual fees may be assessed on assets under management.  Planners may receive commissions when you invest in annuities, mutual funds, or variable life insurance or other investments.

If you feel a planner is pushing you to a product so the planner can make more money, leave. Planners should explain how a particular investment advances you to your goals. You can ask, “What other investment could do that job? Why is this one better?” Appropriate answers will make you feel more confident that the recommendation is right for you.

Fee-only planners may provide an analysis but not specific enough recommendations to implement next steps. 

Note well: Fees? Commissions? Which Designation is best? No payment method or designation buys integrity, ethical behavior, character, pure objectivity, caring, or intelligent advice.  

Worthwhile financial planning is based on trust, honest communication, and appropriate follow through. You trust the planner to do what is best for you. The planner trusts his or her reputation with you. You’re a team working toward your goals!

Penelope S. Tzougros, PhD, ChFC, CLU. In all 50 states, Penelope S. Tzougros is registered with, and securities and advisory services are offered through, LPL Financial, a registered investment advisor, Member FINRA/SIPC. 

Photo by Dmitry Demidko on Unsplash

COMMENTS

3 responses to “Finding a Financial Planner

  1. I love the recommendation to “ask a question to which you know the answer.” That’s a great suggestion. Also the one about mistakes. So many financial planners just always say, “everything is fine.”
    Since this is a site for “seniors” I wish more financial planners also helped in directing how to spend your money in retirement that makes sense from a tax perspective.

  2. I was recently in the situation that Penelope mentions, with having had some funds come through an inheritance. I got to look first-hand at what a major bank’s financial planner had done for my mother. It was shocking! My mother really liked this guy, but he had put her in TONS of investments with front- and back-end loads and high fees that benefitted only the financial planner and financial institutions. People don’t realize how much these fees cost them in terms of their return! We found a fee-only planner who is making recommendations for us with no benefit on his part. And he WILL give specific recommendations on investments! I highly recommend looking for a qualified HOURLY advisor. Get a good plan with low fees!

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