How to Find the Best Financial Planner – 10 Qualities to Look For

We all know how important planning our finances is.

It’s just not enough to obtain money and put it away in the bank while it earns minimal interest.

Investing is the smart way of making your money earn more money for you, but most people just don’t have the time to learn about all the investment vehicles that are available.

To solve this problem, this is where financial planners come into play.  Planners analyze your financial situation and, if you can find a good one, they can help you achieve your financial goals through the proper usage and management of your money.

The challenge now is, how can you find a reliable financial planner that will truly grow your money?

Below are 10 characteristic traits that you should look for in a financial planner during the hiring process:

They Have a Good Reputation

It takes years to build a good and solid reputation, and this is something your planner must have especially since he or she is in the personal finance line of business.

One way to know if your planner is reputable is to ask for a referral list and to make sure you call them up.  Doing so will give you an insight as to how the planner handled previous’ client’s accounts and if they were able to achieve their goals together.

Also be sure to check with authorities such as the FINRA and CFP Board to make sure your planner does not have any black marks against them.

They Have Satisfactory Credentials

All legitimate financial planners should have a certification.  They could either be Chartered Financial Consultants (ChFC), or a Certified Financial Planners (CFP).

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Having these credentials means that they have undertaken certain courses in education that covers wide financial topics and certifies that they are knowledgeable about the craft.

Also, in order to keep their license, these professionals are required to attend continued education units to keep them abreast of important financial happenings.

They Educate You

finding a financial planner

10 qualities to find the best financial planner

A good financial planner should also have the time to educate their clients.  If he or she withholds information from you, then that should already be a warning sign to stay away.

Also, a good way to know if a planner is knowledgeable is by asking him to explain certain concepts to you.  If you find it easy to understand, then you would know that he knows his stuff.

They Charge a Flat Fee

There are a few ways a planner can get paid.

First is by an hourly rate, second is through commissions from products that they’ve sold, and/or third via percentage of assets managed.

Be wary of planners who ask for payment on commission basis.

This is because they could have ulterior motives about the products that they recommend for you.  Chances are, they will only let you get the services in which they will gain the highest commission from, and not because it offers the best returns.

Beware of conflict of interests

They Understand Your Goals

There are some planners who can come off as “know-it-alls.”  Meaning, they don’t really listen to what you have to say and they don’t consider what you want.

It is important for a financial planner to understand what you want to happen with your finances while also giving sound advice when they know of better alternatives.

They Put You First

This goes hand in hand with understanding your financial goals.

The best financial planners tailor their plans around your goals while not trying to simply meet a quota or gain the biggest commission on the number of plans they have sold at your expense.

You can check if your financial planner offers a wide range of products, or if he is only limited to the options that their company sells.

They Are Proactive

Being proactive means they can efficiently take steps for the betterment of your financial future without having to wait for encouragement from you.

If they hear about a new investment vehicle, they would immediately inform you and keep you updated in the best opportunities.

Aside from this, planners should also keep lines of communication open and they should be the first one to call instead of you reaching out to them all the time.

They Have a Support Team

A good financial planner should have access to a broad range of experts that will be able to help them ensure you get the professional advice that you need.

A planner who claims that he is an expert in all areas of finance should be met with caution because it is difficult to be in tune with every aspect of finance without missing out on a few important details.

They are Open About their Strategy

A good financial planner should have no issues when it comes to answering your questions about what exactly they plan to do with your money.

At the same time, the planner should also be prepared to steer your investments in a different direction if in case the first plan doesn’t work out as expected, or market conditions don’t coincide with the plan.

They Don’t Panic

And finally, a good financial planner should not be one that easily panics whenever the market takes a turn for the worse.

Also be wary of planners who are quick to jump into deals without doing a thorough research on the investment vehicle.

Avoid planners who are always raving about the hottest stock picks while giving you a sense of urgency.

When it comes to long term investment and growth, there should always be time set aside for thinking.

These characteristics should help you decide on choosing the right financial planner for you.

Be sure to ask them specific questions, and evaluate whether you are on the same page.  Also, be proactive when it comes to calling up for referrals since it is clients like you who can give the best insight whether the planner has performed satisfactorily in the past.

Author Bio: The following is a guest post by YFS from yourfinancessimplified.com. If you want relevant, witty and easy to follow financial guidance visit him at his website or subscribe to his newsletter by clicking here!

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Published or updated October 25, 2012.

Comments

  1. I would add that financial planners would need to be financially responsible themselves. If they sport ratty unkempt clothes and drive a beat-up vehicle, that would be cause to worry.

    • That’s probably a harder aspect to keep track of. Obviously if their desk is an old refrigerator box then you might have reason for concern, but I would think most would be reasonably dressed.

      I think getting a recommendations from people you trust is important. Also check the referrals the planner provides.

  2. Sure, the comment was a little over the top. What I meant was, it’s worthwhile to see what a financial planner would do in their own personal finance. Would they required to provide a personal credit score, for example.

  3. I am in agreement with you here. A financial advisor definitely should not have crappy credit and they should practice what they preach

  4. Over all I think this is a great article. It is important that people clearly check out the facts on someone before they trust them for advice.

    I disagree on the topic of what kind of car they drive. Some of my wealthiest clients drive cars like a 1973 BMW or a 1984 Toyota Corolla. I agree that an advisor should have good financial management but those indicators can be entirely misleading. Some of the poorest people I met were poor because they were trying to keep up appearances. That being said, I drive a late model BMW just to fit the stereotype ;)

    I also disagree that clients should be wary of commission based advisors. I think there is as much risk in going to a fee-only advisor. Look at the bank advisors – you are stuck with only their products. Talk about a conflict of interest. Banks seldom have the best of the best when it comes to product and every client has significantly different needs. I am commission based and hardly ever write 2 policies from the same company back-to-back – mainly because of a differing need each time.

    What people should really be concerned with is how their advisor matches them to products when the time comes. I am upfront with my clients about what I get paid so they can see what I recommend. Commissions don’t matter to them because they see how the products are the best options to fit their needs.

  5. While you can’t check the credit score of your financial advisor (unless they are willing to share it), you can see if they have ever filed for bankruptcy via http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/ or if they have any other judgements against them.

    If they are Certified Financial Planner, you can see a similar background check at cfp.net. CFP’s run the risk of losing their designation depending on the nature of the bankruptcy.

  6. Great website Jeff. Another thing one can do is check the Investment Advisor Public Disclosure website. search google for lAPD.

  7. One can not teach something and practice another. So it’s really nice to check their tract record.

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