DEAR SAVVY SENIOR: Can you give me some tips on how to choose a good financial planner or adviser? My wife and I are five or six years away from retiring and could use some professional help to get us on track. – Seeking Advice
DEAR SEEKING: With all the different financial advisers and services available today, choosing a trusted professional that can meet your needs can be a bit confusing. Here are some suggestions that can help.
A good place to start your search is by asking friends or relatives for recommendations. If you don’t know anyone who can give you a referral, and you’re looking for broad-based financial advice, hire a Certified Financial Planner, or CFP. CFPs are considered the “gold standard” in the industry. To get the CFP credential, they must have a college degree and be educated in a wide range of personal finance subjects, pass a two-day exam, have at least three years experience, meet continuing-education requirements and abide by a code of ethics.
CFPs are taught to look at the big-picture view of your finances, talking you through your goals, as well as advising you on the details of your financial life.
You’re also probably better off hiring a CFP that’s a fee-only planner, verses one who earns a commission by selling you financial products. Fee-only planners charge only for their services – for example you might pay $150 to $300 an hour for a financial tune-up, a flat fee per project or an asset-based fee.
To find a fee-only planner in your area, use the Financial Planning Association (fpanet.org) or the National Association of Personal Financial Advisors (napfa.org), which has online directories. Or try the Garrett Planning Network (garrettplanningnetwork.com), which is a network of fee-only advisers.
If your needs are more specific, some other financial professionals to consider are a Registered Investment Adviser who is registered with the Securities and Exchange Commission or a state securities regulator to manage investment portfolios; a Chartered Financial Consultant, specializing in insurance and estate planning; and a Certified Public Accountant, who can help with tax planning.
Be leery of many other financial advising titles, designations and certifications that are out there, like the Certified Financial Consultant or the Wealth Management Specialist. Many of these require no more than a few courses at a seminar or online, which means they’re not worth much. You can read more about nearly every certification or designation at finra.org/investors – click on “Tools & Calculators,” then on “Understanding Investment Professional Designations.”
After you find a few candidates in your area, call them up and schedule an appointment to meet and interview them. Find out about their experience, expertise and the types of services they provide; how they charge and how much; their investment philosophy; and how will they handle your ongoing questions or financial needs. Look for someone whose clients are in situations similar to yours and who’s available as often as you need him or her.
It’s also wise to do a background check on your potential adviser. You can look up firms and individuals at finra.org or sec.gov, and even check state financial regulation departments (see nasaa.org for state contact information) and Better Business Bureau records at bbb.org. Also, ask to see the adviser’s ADV Form, part 2. This is a form on which the SEC requires advisers to list their education, services, fees, disciplinary actions and conflicts of interest.
At the end of your meeting, ask yourself: Do I like this person? If you have any reservations, move on. There are plenty of qualified advisers out there who can help you.
For more tips on choosing a financial adviser, visit the CFP Board at letsmakeaplan.org.
Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC “Today” show and author of “The Savvy Senior” book.