How to Choose a Financial Planner?

As of January 2010, according to the Certified Financial Planner Board of Standards, Inc (CFPB) there are approximately 61,000 Certified Financial Planners (CFP) in the United States. California has the most CFP professionals with 6,805.

So, then how do you choose the Financial Planner that is right for YOU?  Here are my recommendations:

First, you need to ask yourself what kind of financial strategy are you looking for. Do you want to build a stock portfolio? Or are you planning for your kids’ college fund? Or perhaps you are planning to save for your future health care costs or retirement?

Second, once you understand your personal financial goals, you need to find a financial planner in your neighbourhood. You can visit the CFPB’s website where you can search by your zip code to locate a professional in your area.

Third, once you found a financial planner, you need to check if they are licensed with the applicable state or federal agency.  Check to see whether they have had any adverse disciplinary records.

Once you selected your potential financial planner, you should call them and ask them about the services they can provide to you and about their qualifications and years of experience. Another important question to ask your potential financial planner is how they will be compensated. Are they compensated based on a flat fee, or based on time it takes to prepare your financial plan? If they are an investment advisor (aka fiduciary) and not a financial planner, they usually get paid a percentage of the size of your investment account also referred to as your assets under management. If they are stock brokers then they typically charge a commission for each purchase or sale of security. Ask them if they get paid by someone else to recommend their product or if they have fiduciary duty to serve your interest ahead of theirs.

In addition the recommendations above, you can also request a free guide to financial planning from the CFP Board.

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