How To Find the Right Financial Advisor

If you want financial planning, finding a professional to guide you through the process is a daunting proposition.   Even referrals aren’t always the solution, since many of your friends might not completely understand what their financial advisor does or whether what’s done is right for them.   Finding a financial planner can be intricate and in depth.  There are also a few simple concerns you can explore to work toward finding a professional that’s a good fit for you.  Here are four basic issues you can address. 

Are they qualified?

The first is what the planner’s credentials are.  Credentials are different from licenses.  So having a securities license, insurance license, or a title from a financial institution will not automatically provide the training to qualify an individual for financial planning.  Financial advisors who are Certified Financial Planners have the training and experience to provide financial planning.  This incorporates, but isn’t limited to, investments, taxes, retirement planning, estate planning, cash flow and insurance. 

Are they going to sell you something?

The next step is to ask how the planner is compensated.  A fee-only planner doesn’t need to sell you products like investments or insurance to make a living.  The planner may be paid through a flat retainer, hourly, or some percentage of assets that are managed. 

The third question is what services the planner provides.  If you work for a living and all your financial needs must be met with what you earn, you might not need an advisor who specializes in people with a large inheritance.  And if you want someone who’ll incorporate all the pieces of your financial life, you won’t be best serviced by a planner who only manages investments. 

Another question to address is whether the planner has an obligation to do what’s in your best interest or if he works for a firm that requires that he provide certain products or services to all clients, even if the client doesn’t need them. 

Where to find them

So where can you find advisors that are likely to have answers to these questions that will make it easier for you to find one that works for you?  There are a couple of professional organizations that foster fee-only financial planners that have their clients’ best interests as their primary goal.  The National Association of Personal Financial Advisors (NAPFA) at  www.napfa.org and the Alliance of Cambridge Advisors at www.acaplanners.com have advisor search functions.  Also, the NAPFA site has a more in depth questionnaire you can use for more in depth interview questions.

About the author

Linda Y. Leitz, CFP®, EA, CDFA

Linda Y. Leitz is a fee-only Certified Financial Planner™ and has been in the financial industry since 1979. She is also enrolled to practice before the Internal Revenue Service. Before becoming a financial professional, Linda held several executive positions in the banking industry. She began her career as a bank examiner. Linda has a BBA in Business Administration from Principia College and an MBA from Southern Methodist University.
As a fee-only financial planner Linda is a member of the National Association of Personal Financial Advisors, the Financial Planning Association, the National Association of Tax Professionals and the Alliance of Cambridge Advisors. As a leader in the financial planning industry, Linda is the author of the book titled "The Ultimate Parenting Map to Money Smart Kids". She has been quoted in several national publications including the Wall Street Journal, U.S. News and World Report, and Morningstar Advisor and she has appeared on CSNBC. She also works as a volunteer instructor to new financial advisors with the Alliance of Cambridge Advisors.

7 Comments

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  • I agree with you that there are many financial advisors who are very ethical and capable people who do not have a CFP or other designation beyond regulatory licenses and who sell products. Many fee-only advisors (myself included) also give free adviced to people in need. In terms of financial professionals charging nothing for their advisor services, either they are paid in other ways or have their financial needs met in another way – commissions, salary, benefactor. A compensation structure, as you pointed out, doesn’t guarantee ethics or values. No profession can guarantee the capabilities of every member, but credentials are established to show some level of commitment. Having been a commissioned financial advisor for several years, the CFP was the step I (and many others) chose for my level of commitment to the ideals of competence and professionalism. It’s a big planet and I don’t know enough people on it or have a way to measure where I rank in terms of that commitment. But I respect all who are committed to providing quality financial advice to those who need it.

  • While I have tremendous respect for advisors all who place the best interests of their clients at the top of their priorities and are committed to continually improving their knowledge and abilities, I recognize that there are many fitting this description who do not hold the CFP designation, who sell products, and who possibly have no third-party credentials whatsoever. I am such an individual, and know many, many more. I preside over the nation’s largest nonprofit financial planning network. There is no individual on the planet with a greater commitment to these ideals than me; and I run an organization of over 3,000 advisors who are incredibly well qualified and consistently place service over self. Many are CFPs, many hold other credentials, many have none at all; but all are fully qualified to reliably engage in comprehensive financial planning and are committed to optimizing their clients’ financial well-being in every recommendation they make. None are captive to specific companies, so they have the flexibility to offer only the best alternatives in each and every case. And unlike the typical CFP, they usually charge nothing for their advisor services. It is ethical character, not fees and third-party advice, that ensures objectivity and responsible financial counsel.

    Rob Drury
    Executive Director,
    Association of Christian Financial Advisors
    http://christianfinancial.vpweb.com/

  • In regard to your TSP, the investment choices are actually pretty good there. There aren’t a lot of choices, but the ones available seem to have low fees and track their indexes well. If you decide to go into an IRA for convenience or consolidation, I’d recommend that you pay an advisor to give you asset allocation recommendations and get you into some good no load funds. You could do that now if you’d like to peace of mind that you’re properly invested. Enjoy your retirement!

  • In regard to finding help with debt reduction and avoiding bankruptcy, there are several options. For starters, good for you that you’re not immediately running to bankruptcy court. That process is legitimate for many people, but it’s really been abused for too long. If that’s your only option, that’s why it’s there. But it isn’t a good first option. Consumer Credit Counseling is the pioneer in helping people with debt reduction. They are respected by creditors and help people get reduced rates, extended payment plans, and sometimes even debt forgiveness. I’d try them first. As a rule of thumb pay the most you can on your highest interest rate loans first every month and just the minimums on everything else. That lowers how much interst you pay in the long haul. Hang in there!

  • I have a TSP (thrift savings plan)account through the federal government which works similar to an IRA. I am retired, over 62 years old and was wondering whether to withdraw the funds to invest in a more profitable situation, draw a monthly annuity or leave as is until I reach age 70?

    Thanks for your help.

  • I have a TSP (thrift savings plan)account through the federal government which works similar to an IRA. I am retired, over 62 years old and was wondering whether to withdraw the funds to invest in a more profitable situation, draw a monthly annuity or leave as is until I reach age 70.

    Thanks for your help.

  • Linda,
    I am in search of a financial advisor to help me manage my debt and help me in deciding whether to sell my home and/or how to pay off my loans. I do NOT want to declare bankruptcy as I can pay off the debt but need to know the best way to do so. How do I find an advisor to help me navigate this?

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