You are not alone. There are few people who should even attempt charting their financial course without consulting someone else. Even experts ask others for advice! So, I offer 7 key components to helping you find the right person to help you make the best decisions possible for you:
- Experience: Reflecting back on my career, I am always amazed at how green we are in the first 10 years of our careers. I would recommend that you seek an advisor with a minimum of 10 years of on-the-job work experience before handing over the keys to your largest financial decisions. Make sure that the work experience is hands-on and specific to your needs. Ask them about their experimental practice history. What was their greatest mistake or great new awareness surrounding the people they help?
- Qualifications: Make sure the financial professional is a CFP® practitioner, a Certified Public Accountant-Personal Financial Specialist (CPA-PFS), or a Chartered Financial Consultant (ChFC).
- Services: Ideally, the first meeting is free so you can see if the relationship is a good fit. At the first meeting, spend time trying to understand if your values are aligned and if the financial planning professional really cares about you and your goals. Ask for a list of services the financial planner offers or the scope of the engagement options. This should define the scope of work and the costs. 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.
- How their firm works: The financial planner may work with you or have others in the office assist. You may want to meet everyone who will be working with you. If the planner works with professionals outside his/her 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 them all out.
- Compensation: As part of your financial planning agreement, the financial planner should clearly tell you in writing how he/she will be paid for the services to be provided. Planners can be paid in several ways (i.e. Commissions, fees, or a combination).
- Other costs: 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 should include the planner’s hourly rates or fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.
- Complaint history: Ask what organizations the planner is regulated by and contact these groups to conduct a background check. All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies. Or, if they are associated with a company that is registered as an investment adviser, they must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form.
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.