Questions to Ask A Financial Planner or Advisor
You may be considering help from a financial planner for a number of reasons: planning for retirement or your children’s education, looking to minimize estate taxes, investing your "serious money," or simply having the peace of mind that comes with working with an experienced professional. You only get one chance at major goals in your life, but an experienced planner has been through these things many times before. In many cases, working with a financial planner can be a helpful step in securing your financial future.
The questions below will help you interview and evaluate a financial planner to see if they're right for you. You will want to select a competent, qualified professional with whom you feel comfortable, one whose expertise and business style suits your financial planning needs. An interview checklist has been included for your convenience.
1. What experience do you have?
Find out how long the planner has been in practice and
the number and types of companies with which she has been
associated. Ask the planner to briefly describe her work
experience and how it relates to her current practice.
Choose a financial planner who has a minimum of five
years experience counseling individuals on their
financial needs. If you are receiving investment advice,
it is advisable to work with someone who has been an
advisor through at least one recession or down stock
market.
2. What are your qualifications?
The term "financial planner" is used by many
financial professionals (and many non-professionals). Ask
the planner what qualifies him to offer financial
planning advice, and whether he holds a financial planning
designation - such as the Certified Financial Planner or
Chartered Financial Analyst marks.
Look for a planner who
has proven experience in financial planning topics such
as insurance, tax planning, investments, estate planning
or retirement planning. These professional designations
show dedication to the profession and the ability to pass
detailed examinations.
Determine what steps the planner
takes to stay current with changes and developments in
the financial planning field. If the planner holds a
financial planning designation or licenses, check on his
background with the
FINRA,
AIMR,
CFP Board or other
relevant professional organizations.
3. What services do you offer?
The services a financial planner offers depend on a
number of factors including credentials, licenses and
areas of expertise. Financial planners cannot offer
insurance or securities products such as mutual funds or
stocks without the proper licenses, or give investment
advice unless registered with state or Federal
authorities.
Some planners offer financial planning
advice on a range of topics but are not licensed and do
not offer financial products. Others may provide advice
only in specific areas such as estate planning or on tax
matters.
4. Are you independent of financial product sponsors?
Getting financial advice from financial product
sponsors is like asking a car salesman whether you should
buy a car....today. Product sponsors include stock
brokerage firms (discount and full service), insurance
companies and banks. Ask the financial planner about the
type of clients and financial situations he or she
typically likes to work with. Some planners prefer to
develop one plan by bringing together all of your
financial goals. Others provide advice on specific areas,
as needed.
Make sure the planner’s viewpoint on
investing is not too cautious or overly aggressive for
you. Some planners require you to have a certain net
worth before offering services. Find out if the planner
will carry out the financial recommendations developed
for you or if you must go elsewhere to do so.
5. Will you be the only person working with me?
The financial planner may work with you himself or
have others in the office assist him or her. You may want
to meet everyone who will be working with you. If the
planner works with professionals outside his own practice
(such as attorneys, insurance agents or tax specialists)
to develop or carry out financial planning
recommendations, get a list of their names to check on
their backgrounds.
6. How will I pay for your services?
As part of your financial planning agreement, the
financial planner should clearly tell you in writing how
she will be paid for the services to be provided.
Planners can be paid in several ways:
- a salary paid by the company for which the planner works. The planner’s employer receives payment from you or others, either in fees or commissions, in order to pay the planner’s salary.
- fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income.
- commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product.
- a combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. In addition, some planners may offset some portion of the fees you pay if they receive commissions for carrying out their recommendations.
7. How much do you typically charge?
While the amount you pay the planner will depend on
your particular needs, the financial planner should be
able to provide you with an estimate of possible costs
based on the work to be performed. Such costs would
include the planner’s hourly rates or flat fees or
the percentage he would receive as commission on products
you may purchase as part of the financial planning
recommendations.
8. Are you licensed by your state or FINRA in Securities or Insurance?
Many financial planners offer advice in securities or
insurance when they are not licensed in these areas. Some
states do not require licensing but consumers should
insist that their advisor be properly regulated and
licensed. Licensed persons must pass examinations and
have many hours of continuing education annually.
However, some licensed advisors are merely salesmen in an
advisors suit.
Ask the planner to provide you with a
description of her conflicts of interest in writing. For
example, financial planners who are employees of banks,
insurance companies or investment firms often favor their
own company products, even when less competitive. The
planner may also have relationships or partnerships that
should be disclosed to you, such as business he or she
receives for referring you to an insurance agent,
stockbroker, accountant or attorney for implementation of
planning suggestions.
9. Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?
Several government and professional regulatory organizations, such as the
FINRA,
your state insurance and securities departments, and the
CFP Board keep records on the disciplinary history of
financial planners and advisers. Ask what organizations
the planner is regulated by, and contact these groups to
conduct a background check. (See listing at end.)
All
financial planners who have registered as investment
advisers with the Securities and Exchange Commission or
state securities agencies, or who are associated with a
company that is registered as an investment adviser, must
be able to provide you with a disclosure form called Form
ADV or the state equivalent of that form. Many financial
planners do not hold securities or insurance licenses.
10. Can I have it in writing?
Ask the planner to provide you with a written
agreement that details the services that will be
provided. Keep this document in your files for future
reference.
See our checklist for
evaluating a financial planner or investment advisor
Want to learn more about us?
Our highly-awarded services included
comprehensive
financial planning,
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and
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To Find a Financial Planner in Your
Area
MWBoone and Associates, LLC
777 - 108th Ave NE Suite 2230
Bellevue, WA 98004
Certified Financial Planner Board of
Standards
888-CFP-MARK (888.237.6275)
Fax: 303-860-7388
Web: http://www.cfp.net
Association for Investment Management
and Research
www.aimr.org
Institute of Certified Financial Planners
800-282-PLAN
International Association for Financial Planning
888-806-PLAN
American Institute of Certified Public
Accountants-Personal Financial Planning Division
800-862-4272
American Society of CLU & ChFC
800-392-6900
To Check the Disciplinary History of A Financial Planner or Adviser
National Association of Securities Dealers
800-289-9999 or
http://www.finra.org/index.htm
Certified Financial Planner Board of Standards
888-CFP-MARK
North American Securities Administrators Association
888-84-NASAA
National Association of Insurance Commissioners
816-842-3600
National Fraud Exchange (fee involved)
800-822-0416
Securities and Exchange Commission
800-732-0330
Some of the information on this page is provided as a public service by the Certified Financial Planner Board of Standards. A nonprofit, professional regulatory organization, the CFP Board exists to benefit and protect consumers by setting ethical and competency standards for financial planning professionals.
1998 Certified Financial Planner Board of Standards, Inc. All rights reserved. Certified Financial Planner and CFP are federally registered service marks of the Certified Financial Planner Board of Standards, Inc.