Choosing Your Financial Planner

Choosing Your Financial Planner

Choosing a financial planner is one of the most important financial decisions you will ever make. Partnering with the right financial planner can help reduce financial stress and give you confidence and security today and in the future. Below are issues you will want to explore before you hire your financial planner. Whether you have been referred to a financial planner, by a friend or family member or have found one using the Find a CFP® Professional tool, be sure to interview at least three planners so that you can find the one who is the best suited for you.

SPECIFIC QUALIFICATIONS AND CREDENTIALS

What credentials does your planner hold, and are they up to date with current changes and developments in the financial planning field? CFP® professionals commit to the CFP Board to expand their knowledge and stay informed through mandatory continuing education.

Don’t be afraid to ask for a brief description of the planner’s work experience and how it relates to their current practice. Remember CFP® professionals will have at least two years of experience in personal financial planning.

SERVICES OFFERED

Credentials, licenses and background are factors that determine the services an advisor can offer. Ask your advisor what products, services and advice he or she can offer that match your needs.

WILL YOU HAVE A FIDUCIARY DUTY TO ME?

You should request the financial professional to commit to you, in writing, that they have a fiduciary duty to you. A fiduciary is someone who will put your interests ahead of theirs. This is important because there may be situations where the interests of the financial professional conflict with your interests. A fiduciary has an obligation to disclose any conflicts of interest and continue to put your interests first. That may seem like common sense, but not all financial professionals have a fiduciary obligation.

One benefit of working with a CFP® professional is that they, as part of their certification, commit to the CFP Board to act as a fiduciary when providing financial advice to a client. CFP Board may sanction a CFP® professional who do not abide by this commitment, but CFP Board doesn’t guarantee a CFP® professional’s services. What you want is a financial advisor who has made a commitment to act as a fiduciary. Therefore, whomever you choose should provide you with a written engagement requiring them to have a fiduciary obligation to you.

WHAT IS YOUR APPROACH TO FINANCIAL PLANNING?

Ask your advisor to create a comprehensive financial plan for you. Also, ask if they will implement the plan and its recommendations. Sometimes, other professionals implement recommendations or alternately, you may want to implement them yourself.

WHAT TYPES OF CLIENTS DO YOU TYPICALLY WORK WITH?

Some financial advisors prefer to work with clients whose assets fall within a particular range, so it’s important to make sure the advisor is a good fit for your individual financial situation. When searching for a CFP® professional you should specify what your investable asset range is. This will help you find a planner who accepts new clients with your level of assets. Some financial advisors earn fees based that are based on a percentage of the investable assets they manage for you. Investable assets include cash, checking and savings accounts, stocks, bonds, mutual funds and retirement accounts.

If you have any unique circumstances, make sure to mention them to the planner so that you are able to decide if the advisor is a good fit for your circumstances. A CFP® professional may self-disclose in their profile if they specialise in a certain area, such as working with small business owners or with women.

WILL YOU BE THE ONLY ADVISOR FOR ME?

Some financial planners work with clients directly, while others have a team of people that work with them to serve clients. Ask who will be working with you, and ask whether the planner works with professionals outside their own practice. If yes, ask for a list of names, roles and qualifications.

HOW WILL I PAY FOR YOUR SERVICES?

You can pay for financial advice in several ways. You may pay a fee based on a percentage of the investable assets. You may pay an hourly rate, a fixed fee by the service or a monthly or quarterly retainer fee (i.e., a subscription fee) for the services of a CFP® professional on an ongoing basis. Some CFP® professionals may earn a commission. Typically, a commission is compensation for buying or selling a financial asset, such as a stock. Your CFP® professional is able to disclose that information to you along with the fee structure. Your advisor should clarify how he or she expects to be paid for services rendered.

HOW MUCH DO YOU TYPICALLY CHARGE?

How much you pay depends on your needs and circumstances. Your planner should provide you with an estimate of possible charges based on the services that will be used as well as any products that will be required to implement the plan.

DO OTHERS STAND TO GAIN FROM THE FINANCIAL ADVICE YOU GIVE ME?

Ask your planner to describe any potential conflicts of interest. Conflicts can occur if the planner’s interests are adverse to their duty of care. Some financial planners who sell insurance policies, securities or mutual funds may have a business relationship with companies that provide these products. By clarifying this point, you will be able to decide whether to accept the conflict or work with someone else entirely.

As part of their certification, CFP® professionals commit to the CFP Board and abide by its Code of Ethics and Standards of Conduct.  Planners are aware they should not place their interests first when providing financial advice, even if there is a conflict of interest. That commitment includes disclosing conflicts of interest to clients and getting clients’ consent. The CFP Board sanctions CFP® professionals who do not abide by this commitment.

HAVE YOU EVER BEEN PUBLICLY DISCIPLINED FOR ANY UNLAWFUL OR UNETHICAL ACTIONS IN YOUR CAREER?

Ask your financial planner if they have ever been publicly disciplined by an organisation that oversees their conduct. Information about financial planners who are subject to Financial Industry Regulatory Authority or to Securities and Exchange Commission oversight can be found at the Australian Securities and Investment Commission (ASIC)  https://asic.gov.au/for-finance-professionals/afs-licensees/financial-advisers-register/

It is helpful to check the ASIC database to confirm if people or companies are licensed and if a property has money owing. This link provides that data https://moneysmart.gov.au/check-asic-lists  The disciplinary history of a CFP® professional is also available at this evidence-based website.

In a perfect world, the financial planner you select will be as driven and as enthusiastic as you are to meet agreed on financial and property goals. The collaborative process between client and advisor can help you to maximise the potential for meeting individual life goals. As the authors of The Trusted Advisor explain, the “key to professional success is the ability to earn the trust and confidence of clients.” A trusted advisor gives sound financial advice, while integrating relevant aspects of a client’s personal and financial circumstances. This is major reason why it is imperative that you and your financial planner devise a plan that is tailor-made for you.