5 Important Tips to Consider When Choosing a Financial Planner

Need professional assistance to manage your finances?

black professional couple workUnderstanding the financial marketplace is a daunting task. You’ve spent a lot of time working hard to earn and save money, and now you want to make sure it’s going to sit in a safe – and hopefully profitable – place. If you’re new to the game, or simply don’t have the time to devote to it, a financial advisor can certainly help you out. However, choosing the right one can be a challenge in itself.

The following five tips can help you find the right match for your financial situation:

1. Determine Your Needs

The first step is to get a clear idea of your plans for the future and determine what exactly you need. Some financial planners offer wide-ranging advice that covers all markets. Others are more specifically market-oriented and can focus your attention on particular sectors. Are you targeting retirement planning? Estate planning? A comprehensive investment strategy? Once you answer these questions, you can get a better idea of the type of planner you need.

2. Use Your Personal Network

Before you go searching the Internet for qualified financial planners, consider asking your friends, family, and coworkers for a referral. If you can get a first-hand account of a financial planner’s responsiveness, intelligence, cordiality, and, of course, success, you’re going to be a lot more comfortable than if you simply pick one out of the Yellow Pages.

3. Verify Credentials

Thoroughly verify the credentials of every potential financial advisor. Start by investigating your prospective planner at the Financial Industry Regulatory Authority website, FINRA. You can check qualifications, registrations, and make sure the advisor you have in mind hasn’t been subject to any disciplinary action. Then ask for referrals directly from your targeted planners. Speak to clients in similar situations and be sure to ask the tough questions: Is this advisor communicative? A hard worker? Devoted to your case? And, of course, have your investments grown?

4. Shop the Competition

At the very least, consider three different financial planners before making your final decision. Get a solid understanding of what each advisor has to offer, their cost, and how they’re paid. If possible, spread these prospects out over separate companies. You may want to look at someone at a large, global firm, and compare services and costs to those of an advisor at a smaller company. Many financial planners also offer free initial consultations, so be sure to inquire about that as well.

5. Clearly Understand the Cost

Reputable planners are upfront about how they’re paid, so avoid anyone who is unclear regarding cost. Financial planners are compensated in a variety of ways: fee-only, commission-only, a combination of fees and commission, and other variations. Be sure you have a clear understanding of what they charge, and factor that into your decision.

Final Thoughts

Although the out-of-pocket costs for a financial planner may seem significant, they can very well be worth the expense. Your retirement savings, your child’s college fund, and your estate planning are all critically important, so make sure you’re in the hands of a reputable, ethical, and wise advisor. Just take the time and do the proper research and you can find the right match for you.

What are your thoughts on financial planners?

David Bakke writes about making smart decisions with money on the popular financial resource, Money Crashers. He lives in Atlanta with his young son and runs a small business.

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