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How to Choose a Financial Planner

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Are you ready to get your finances in order? Find out how to pay off debt faster, save for a new home or start investing?

A financial planner would help you achieve these goals faster.

They are also great for people who lack financial discipline or just the time to think about all these money issues.

Here are some tips to choose the best financial planner possible:

Ask around for recommendations

Just like with many other products/services you want to acquire, asking your friends/relatives about who they’ve successfully done business with would help you choose the best candidates.

Ideally, the planner should advise clients who have the same goals/interests as you (the clients also have kids and want to save money for college, they want to save money for a home, they want to pay off debt faster etc.), since they are already versed in that area.

To get even more quality leads, you can look into the National Association of Personal Financial Advisors (NAPFA).

The planners who are advertised there work fee based only, meaning they don’t accept any commission and pledge to act in the client’s best interest.

Look out for a CFP (Certified Financial Planner).

These financial planners have passed a rigorous test administered by the Certified Financial Planner Board of Standards and also have to continue their education to maintain their designation.

While these financial planners are not all geniuses, the chances to get a great one increase, since their activity is so closely regulated and monitored.

Avoid financial planners who earn their living on commission.

There are two ways your financial planner makes money: you pay an hourly or flat rate for their services or they get a commission every time you buy/sell stock or make another investment.

It’s easy to understand that a commission based relationship might not be the best deal for you, since the financial planner makes more money if they steer you in a certain direction.

Fee-based advisers might not be a perfect fit either. If they earn 1% of your annual assets for instance, they’ll be inclined to prevent you from buying a big house or liquidating your investments, even if these are the right moves to make, since their income would get smaller.

Ideally, especially if you are starting out, an hourly-based finance planner could work better.

Some of these are also beginners, but they are building their business and need any good recommendation they get. This means they are more likely to act in your best interest, since your testimonials matters for their business.

Look for a fiduciary

It meas the financial planner you are looking for has pledged to act in the client’s best interest, so it would make them a great fit for your financial future.

Always run a background check

Just like you do with a tenant or someone looking to get hired for a job in your company – it makes sense to run a background check on someone who should help you manage your finances in your best interest. Has that someone ever been convicted? Or under investigation, even if not found responsible/guilty?

Can you get any references from past clients?

All this information should help you single out the most honest and well recommended financial planners.

Stay away from planners who make predictions about market-beating performances.

Warren Buffet outperforms the market averages. But, let’s face it, there are little chances of finding people who are as versed as he is. No one can make such a guarantee, since they’ll probably take risks you shouldn’t accept.

A great way to stay away from such planners is to just ask them if they’ll beat the market. If the answer is affirmative, you can safely look for someone else.

These are just  few tips to help you get a great financial planner to help you achieve your money goals.

1 COMMENT

  1. Ramona, I agree with all the points you have outlined above but my question do we really need a financial advisor, i think in this era a person might be better served reading finance article and blogs to educate themselves, there are many informative blogs o the web, and yours is one of them which helps people to know where they should invest, how they should plan for retirement etc etc, and trust me these days financial advisors also gets the knowledge from the website like yours. Keep posting. I will subscribe to your blog to get more informative posts in my inbox.

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