What You Should Consider When Choosing a Financial Planner

By Crystal Wipperfurth, CFP®, CRPC®, Wealth Advisor


Asking for help when it comes to your financial decisions is never a bad choice. Whether it is something as simple as, “How much should I contribute to my 401k?” or as big as, “Can I retire next year?” we could all use some help along the way. Enlisting the services of a financial planner is a major decision, since this person may ultimately be managing your financial life, maximizing your wealth, planning for your retirement, and helping you work towards major goals. Because of that, your search process should involve several steps as it would when hiring any sort of expert assistance.

Choose a Financial Planner with a Well-Regarded Certification

The world of financial advice is loaded with a myriad of certifications to designate that a person has undergone some sort of additional training in financial matters. With more than 100 professional financial designations in the industry, consider the ones that are the most highly regarded. The National Association of Personal Financial Advisors (NAFPA) suggests limiting your search to professionals with the following certifications:

  • Certified financial planner (CFP®) – Recognized as the “highest standard in personal financial planning” by the CFP board, professionals with this designation have spent at least three years in the industry and have passed a demanding test administered by the Certified Financial Planner Board of Standards. Well-versed in the specifics of personal finance and financial ethics, the CFP designation conveys a commitment to continuing education in the profession and an ability to provide sound financial advice.
  • Personal Financial Specialists (CPA/PFS) – Certified Public Accountants can further their expertise by pursuing a Personal Financial Specialist A professional with CPA/PFS certifications has passed a comprehensive financial planning exam that prepares him or her for the various responsibilities of a personal financial planner.
  • Chartered Financial Consultant (ChFC®,) – Professionals with this designation experience the same core curriculum as a CFP®, but must also take additional elective courses that specialize in various areas of financial planning. The caveat to this designation is that ChFC individuals do not have to pass a lengthy boards exam to receive the credential. Nonetheless, a ChFC is well-equipped to respond to personal financial matters.
  • Chartered Retirement Planning Counselor (CRPC®) – CRPC® is a professional that has passed a single comprehensive exam focusing on every step of the retirement planning process. If you are looking for a certified professional to help plan your retirement, a CRPC® can be a trusted advisor to help with the specific planning topics related to the finances of retirement.

Determine What Type of Relationship You Need From a Financial Planner

The type of financial advice you need will help determine what sort of relationship you hope to establish with a professional planner. If you require specialized advice about a one-time investment, then you will have different needs from someone who requires ongoing, comprehensive planning. Additionally, many advisors combine their planning expertise with investment expertise, and offer services wherein they manage your financial plan and investment strategy in cooperation with each other. Here are some typical service structures that you will encounter in your search:

  • Hourly consultation: Great for financially savvy people who require specialized advice when facing difficult investment decisions, such as buying or selling a business. These advisors typically provide upfront clarity about their hourly costs given the scope of the work you require.
  • Comprehensive financial planning and strategy: If you need a one-time roadmap for how to plan your financial future, hiring an advisor to assist in creating this type of plan may be best for you. They can provide you comprehensive advice for all of your financial needs, usually for a flat fee or hourly-rate.
  • Asset management: If you are looking for a long-term partner to help you with continuous financial management of your wealth and investments, you may consider an advisor who can also offer asset management. They often charge clients based on a percentage of the assets you ask them to manage.

What is the Financial Planner’s Pay Structure?

Commission-based financial planners charge clients a fee whenever they buy or sell stocks (or other investments). Given that this type of advisor receives a commission for every financial action they perform on your behalf, they may be motivated by the purchase or sale of assets that may not be congruent with your goals. However, if you are looking for advice on a single transaction, this might be a good option. For example, if you are interested in buying and holding (i.e., not selling) a single mutual fund for the long-term and do not require ongoing advice, a commission-based advisor may be the cheapest option.

Flat-fee financial planners charge their clients for services on a per-use basis. They may charge you a one-time fee to create a financial plan, but may also try to sell you products for a commission or may try to recruit you as a fee-based client. Nonetheless, if you are simply looking for a one-time plan to answer some of your questions about your financial future, and do not require ongoing advice, a flat-fee advisor may be a good option.

Fee only financial planners are best for those seeking ongoing comprehensive financial planning and asset management. These advisors charge clients through hourly rates or based on a percentage of the assets they manage. While these advisors offer financial planning services, they are typically looking for long-term partnerships with their clients. The advantage of fee-only financial advisors is that they do their best to coordinate your assets to create a comprehensive plan for you, which is reviewed regularly and revised as changes in your life come up.

Your Financial Planner Should be Bound by Fiduciary Rules

Financial planners who are fiduciaries have pledged to act in their client’s best interest at all times. This may seem like an obvious arrangement; however many advisors still abide by a looser “suitability” standard, meaning they are permitted to recommend products or services to a consumer from which they (the advisor) collect financial benefits, so long as the recommendation can be defended as “suitable.” The industry rules on the fiduciary standard are indeed tightening (and you can read more about our take on these changes here), but if you seek out a planner who adheres to the fiduciary rule, you can rest assured that their interests will be most closely aligned with yours.

Consider Running a Background Check on Your Planner

When it comes to your money and your financial security, every detail matters. Running a background check through FINRA’s BrokerCheck service is a quick, easy, and free way to learn details about your prospective planner that you might not have otherwise known. This service will display  information about past investigations and disciplinary actions, which could be signs of poor ethics or compromised fiduciary duties. BrokerCheck is only a partial picture, though, and does not necessarily cover all designations and past history, so you should also review the individual’s background in part 2B of their firm’s ADV filing. ADV forms are available on all advisor websites, and can also be shared by the advisor upon request.

Finally, make sure your prospective planner has the experience they claim. Simple searches on Google and LinkedIn should verify their professional industry experience. And, while no financial planner can consistently outperform the market, make sure they don’t make any outlandish claims or guarantees.

A Financial Planner Should be a Trusted Partner Working for Your Future, Period.

In your search for a financial planner, you want to make sure that you are hiring someone you can trust with some of the most intimate details of your life. Before you hand the details of your financial life off to a new advisor, putting them through some qualifying steps is the best thing you can do for the safety of your financial future. Ask prospective advisors what are their personal philosophies, do some due diligence on your own, and educate yourself on various service and fee structures. In the end, time spent on this process will prove to be yet another wise investment.

Related Resources:

White Paper: What is a Fiduciary?

BELR: Our Financial Planning Process

Perspective: The Other “F” Word: Our Take on the DOL Fiduciary Rule


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Bronfman E.L. Rothschild is a registered investment advisor (dba Bronfman Rothschild). Securities, when offered, are offered through an affiliate, Bronfman E.L. Rothschild Capital, LLC (dba BELR Capital, LLC), member FINRA/SIPC.
This information should not be construed as a recommendation, offer to sell, or solicitation of an offer to buy a particular security or investment strategy. The commentary provided is for informational purposes only and should not be relied upon for accounting, legal, or tax advice. While the information is deemed reliable, Bronfman Rothschild cannot guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with regard to the results to be obtained from its use. Past performance does not guarantee future results. © 2017 Bronfman Rothschild