How do you find a certified financial planner that is just right for you? There is little doubt that most people can benefit from good advice. These eight questions act as a great checklist to help you find the right adviser.
The Top Five Topics you should Consider before hiring a CFP:
1. What are your qualifications and experience?
All planners need to be suitably qualified to provide personal advice. They should readily provide their qualifications upon request.
Currently there aren’t many qualifications required to be registered as an authorized financial planner. Therefore, to get a real sense to their standard of education you can also ask:
Do you have a finance degree?
Are you a Certified Financial Planner?
What did you study last at college/university?
What training and studies do you currently undertake?
Qualifications are one thing, but you also want to know about their experience. Key questions include:
Describe your typical client?
How long have you been working as a CFP?
What have you learned most since becoming a financial advisor?
These questions are simple conversation starters. However, they play a pivotal role in establishing a real sense of who they are and what they do as a financial planner.
2. What is the structure of the company employing the financial planner?
Most planners work for small companies that are operated by the top financial planner. You’ll want to know if the financial planning company is capable of managing your affairs both for now and in the long term. Key questions to ask:
How long has the company been in operation?
How long has the core staff been at the company?
What will happen when the current company owner(s) exit the business e.g. at retirement?
Is the business linked to a major institution and if so, does this create any conflicts?
Investing for the long term may well be investing beyond the working life of the financial advisor. You need to be confident that you will be taken care of when things inevitably change.
If the company is linked to a major institution, you need to consider if this will create bias in the advice from the financial planner. However, for many investors being linked to a major institution does provide some level of security.
3. What are the benefits for the financial planner by working at this company?
Simply ask – What are the benefits for you working at this company?
They should be able to articulate their answer quite easily. In their answer, you are looking for benefits that find their way back to you as the client. For example, if they say ‘The company provides great facilities and support that allows me the freedom to focus on the client’, that is a good start.
If they are struggling and just rambling on, this would obviously not be a good sign! Worse still, if they say ‘That the company pays the best bonuses in town’, it’s time to move on to the next financial planner.
4. What are the disadvantages for working at this company?
Simply ask: What are the disadvantages of working at this company?
Now this is a tough one, everyone finds it easy to talk about the good but we all know there must be some bad! You are looking for honesty in their answer. If they are honest they will highlight a couple of things such as a restricted range of investments, lack of on-line presence etc.
If they say ‘The business is too strict on its auditing and compliance’, this should start ringing the warning bells. A good financial planner should not be afraid of good compliance procedures and ultimately good compliance is there to protect you as the client.
5. What fees will be charged for the services provided?
You need to know the fees no matter how much they may care for you.
Ask: Can you give me a schedule of fees for the services that you will provide?
It is important to understand that fees tied to your investment account can eat into your investment returns and of course, you won’t get quality advice and service for free either. Your goal is to fully understand the fees and what you get in return for these fees. This way you can compare financial planners and make an informed decision as to which one is suitable for you.
While you don’t have to like the person, you do need to be able to trust them. Like all good relationships in life, trust will be critical for the relationship to be a success.
If you follow the questions, take notes and consider a number of financial planners, you will be in a much better position to choose one with confidence.