How to find a good financial planner
Sound advice is not hard to find
By Beth Braverman
Selecting a Certified Financial Planner is one of the most important financial decisions you will make. Here are the steps to find a good one.
1. Consider your priorities
Nick Bormann, CFP in Spokane, Washington, says counselors tend to specialize in a particular type of Financial advice or focus on groups of customers with similar financial problems – teachers, technical executives, pre-retirees from the middle class, etc.
So start your research by identifying your main needs and goals. If you want to get out of debt or boost your savings as you approach retirementlooking for someone with experience budgets and coaching clients to live within them. If you’ve accumulated a nest egg, but aren’t sure if it’s enough to sustain your lifestyle until retirement, choose a planner who has experience in projecting long-term financial plans and distribution of savings between types of retirement investments.
2. Identify planners that meet your needs
Almost anyone can call themselves a financial advisor. And there’s a bewildering array of formal credentials, with an alphabetical soup of short titles to match. For the sake of simplicity, you really only need to know one: CFP, or Certified Financial Planner. You can count on a CFP to have undergone extensive training and passed a rigorous exam, and to be able to advise you on a wide range of financial matters. Special titles, some more meaningful than others, are often layered, such as Certified College Finance Specialist (CCFS).
You can find CFPs in your area by specialty on FPA PlannerSearch, the National Association of Personal Financial Advisors, the Garrett Planning Network, and the XY Planning Network. These websites only list planners that are supposedly trustees, meaning they are obligated to put your financial interests ahead of their own. To be on the safe side, some experts recommend asking your planner to commit to fiduciary status in writing.
Photo illustration: Consumer Reports, Getty Images
3. Calculate the costs
Limit your search to paid advisors, who charge for advice and asset management and do not receive commissions from selling you financial products.
Paid advisors use a variety of payment models, says Roxanne Martens, financial advisor at CGN Advisors in Manhattan, Kan. Some charge an hourly rate, which can range from $100 to $400. According to a 2019 study, many of the same planners will charge a flat fee for a pre-determined set of services, averaging $2,400 to assess your financial life and develop a comprehensive long-term plan. These templates tend to work best if you’re looking for help with a specific problem or a plan that you’ll do yourself, possibly with periodic check-ins.
Other advisors charge clients a percentage of assets under management each year. Their rates generally vary from 0.6 to 1.2% of the size of the portfolio, annually. The percentage is often lower for larger account balances, so this model is usually most profitable for investors with more assets and more complicated financial lives. Some planners only use the percentage model and, take note, will only take you on as a client if your wallet reaches their minimum.
4. Examine the suitors
Once you have compiled a list of candidates, confirm their credentials through the CFP Council. And make sure no disciplinary action has been taken against them by contacting the Securities and Exchange Commission Investment Advisor Public Disclosure to place.
Then schedule a time to speak with two or three of the most promising candidates, ideally in person. Many good financial advisors offer a free initial consultation. Make sure they have experience working with clients in similar circumstances. (Ask them to describe how they handled a situation like yours.) This can be the start of a long relationship, which will likely touch on very personal issues. So make sure they communicate clearly and listen well, and they can keep you motivated to stick with your long-term plans.
More places for low cost money advice
There’s no substitute for having a conscientious professional committed to improving your financial well-being. But if your financial needs are limited — say, you just want a digital budgeting tool to track your expenses or basic guidelines for allocating your investments between asset classes — cheaper (and even free) sources of advice solid finances can do the trick. Here are some places to look:
1.) Your current bank or credit union may offer digital tools that can help you track your spending and highlight areas where you may be able to make changes. You can also use third-party apps like mint Where You need a budget for that. If your biggest problem is debt, you may be able to find low-cost advice from a nonprofit credit counselor. Find one in your area at National Credit Counseling Foundation.
2.) Many companies looking for non-monetary ways to improve the financial well-being of their employees have started offering free or subsidized access to investment tools and even one-on-one live sessions with financial advisors . “You should absolutely ask your HR department for any consulting or complementary services,” says Lynnette Khalfani-Cox, CEO and co-founder of the consulting site. AskTheMoneyCoach.com.
3.) Apps like Improvement and wealth frontand Vanguard Digital Advisor Service, use algorithms to recommend a personalized investment mix based on factors such as your age, long-term financial goals, and ability to tolerate market fluctuations without straying from your long-term plans. With fees of 0.25-0.4% of assets under management, these platforms are usually cheaper than a human advisor.
Editor’s note: This article also appeared in the November 2022 issue of Consumer Reports magazine.
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