- Make sure they’re a CFP®. At the very minimum, a CERTIFIED FINANCIAL PLANNER™ has the met the education, exam, ethics and experience requirements in order to be qualified to discuss your financial planning needs. Anyone can call themselves a financial planner, but not everyone is a CFP®. This should be the starting point of your search. Just because the planner is a CFP®, doesn’t mean you should automatically work with them.
- Make sure they’re a fiduciary. A fiduciary is legally required to act in your best interest – regardless of the financial outcome for the planner. Planners that have only a suitability requirement are not required to act in your best interest, but merely find a product suitable for your situation. In other words (and these are my words) they only need to rationalize why the product is a good fit for you, but it may not be in your best interest. Some planners are required to act in their company’s interest first, which means your best interests are secondary.
- Make sure they’re fee-only. This means that the planner’s only source of compensation is directly from you and not from the commissions on the sale of mutual funds or insurance products. That is, you pay them directly for advice and they work for you. Fee-only can be an hourly rate or a percent fee on your money if they invest your money for you.
- Make sure your personalities mesh. Nothing’s worse than getting butterflies every time you have to meet with your planner or your planner being reluctant to return your call. The relationship should be professional, yet enjoyable and even fun. Sometimes personalities don’t click and sometimes they mesh perfectly. Life’s too short and your money too hard-earned to be uneasy talking with your planner. The good news is that generally if the planner lines up with the first three points, it becomes easier to focus on the relationship and building trust together.
Interview a few planners that meet the descriptions above and see which one you like best.