Financial Planning Experts: What to Look For

Looking to invest and unsure where to start? There are many different types of financial and investment professionals. There are also varying regulations, unique backgrounds and a range of experiences you may find among these professionals. You want someone with the skills and experience suited to your specific needs, but what are our options? 

A financial planner can assist you in deciding how and where to invest your money and a tax professional can tell you the tax implications of your plan. Do not assume your tax preparer can adequately fill both roles. Accountants are not typically trained in financial planning, though they could also have a second credential in the area of investing. One designation, Personal Financial Specialist (PFS), is specifically for CPA's, but not all CPA's will have this. It's important to know if your tax preparer has this additional training and skill. Note: if you are also looking for a tax preparer, see my blog post, Interview a Tax Preparer: Questions to Ask

Questions to ask a financial professional

It is best to customize a list of questions specific to your needs and investment goals. Here are a few questions to consider asking.

  • What type of certification do you hold (CFP, CFA, ChFP, etc.)?
  • How long have you been practicing as a financial professional?
  • Do you typically work with clients like me (age, similar goals, income level, self-employed, etc.)
  • How are you compensated? Commission, fees, both or fee-only? 
  • How many clients do you have?
  • How responsive are you to phone calls and emails?
  • How much time can I expect to spend working with you each year?
  • How will you help me achieve my goals?
  • How much discretion will you have over my investments?
  • What happens if there is a market crash? 
  • What are the options if I need quick access to my funds?
  • Are you part of a team? If you become unavailable who would take over my account?
  • Are you a fiduciary and what does this mean to you?

When to run the other direction

There are some red flags that could come up when you meet a financial planner or investment advisor. A qualified professional will steer away from these behaviors, pressures and promises. Your gut feeling isn't going to tell you everything, but if you have a bad feeling during the meeting, it is okay to keep looking.

  • They are heavily pushing a particular product.
  • They make a commission for selling the product.
  • They overpromise or predict to know how the market will perform.
  • Their advice does not match your personal financial goals.
  • They speak down to you and act as though the options are overly complicated and you can’t possibly understand the products yourself.
  • They brush off or minimize your questions, uninterested in taking time to educate you.
  • Any high pressure during your meeting or afterward.

There is no emergency to investing or choosing a financial professional. You absolutely do not have to decide today, tomorrow or even next week. Don't wait years either, but rushing because you are pressured will often lead to poor investing decisions. Take your time and avoid professionals with pressure tactics.

Types of financial planners

Some of the more common designations and certifications are listed here. Many more than these types of financial professionals exist. In fact, there is a nearly endless list of certifications and designations you may run into, some of which sound nearly identical to these. 

Certified Financial Planner (CFP)
Requirements: bachelor’s degree, completion of an 18-credit hour college level program in personal financial planning or equivalent, pass a rigorous exam, three years of full-time experience (6,000 hours), pass a background check and agree to adhere to the CFP Board Standard of Professional Conduct. 

Chartered Financial Analyst (CFA)
Requirements: bachelor’s degree or four years professional experience, pass three exams and agree to the CFA Institute Code of Ethics and Standards of Professional Conduct.

Chartered Financial Consultant (ChFC)
Requirements: three years of business experience, equivalent of 27 credit hours of education, pass an exam.

Registered Investment Adviser (RIA)
Requirements: be registered to an RIA firm, pass the Series 65 Uniform Investment Advisor Law exam covering laws and regulations, ethics, retirement planning, portfolio management and requirements for fiduciaries, or alternatively, hold a financial planning designation that exempts one from taking the exam. Many RIA's also hold a financial planning certification.

Personal Financial Specialist (PFS)
Requirements: hold a valid state issued CPA license, complete 75 hours of education across nine knowledge areas, gain 3,000 hours of business experience, teaching experience or equivalent, pass an exam, and be a current member of the AICPA.

Ask the professional you are considering hiring what designations or certifications they hold and verify they are in good standing with any regulatory, state or accrediting body to which they received their credentials. Most accrediting bodies will have ethics rules online and you can read them to know that the professional you hire is acting within those ethical bounds.

Compensation and fiduciaries

Financial planners can be paid on commission, a combination of commission and fees, or fee-only. Fee only is ideal because you know the financial planner is not motivated to sell you certain products. They are paid based on the time they spend working with you, not on what you eventually decide to do. 

Choosing a "fiduciary" is also a wise move. Fiduciaries must provide you the options that are best for you and have agreed to act with honesty and integrity. This prevents them from offering you only products that maybe good for you, not the best, but where their interest is on what is best for them as the advisor. When choosing a professional, ask them if they are a fiduciary and have them explain in their words what that means. 

Directories to help find a financial planner

Here are a few directories for look for a financial planner:

National Association of Personal Financial Advisors

Association of African American Financial Advisors

XY Planning Network 

Alliance of Comprehensive Planners

Learn more

If you are considering a financial planner or advisor with an accreditation not listed here, check out the additional resources below to learn more about the requirements.  

General categories of investment professionals

Long list of professional designations

Both of these links take you to the Financial Industry Regulatory Authority (FINRA) site. FINRA is a government-authorized not-for-profit organization and a great resource if you have questions about investing or investment professionals. 

Do not lose sight of your investments

No matter how skilled your financial professional is, you need to keep an eye on your investments. Your relationship with your investments and financial professional requires periodically checking in so you can know what is going on, ask questions and be empowered when it comes to your ability to attain your long term goals. 

Bottom Line

It can be confusing and stressful to find the best professional to help you with your investing and financial planning decisions. Choosing a professional may be the most important decision you make in the process. Take your time, explore your options and interview several professionals if needed. The right professional will not only stay focused on your financial goals, they will become your trusted advisor for years into the future and help you achieve your dreams.

updated 9/18/2020

Questions: email [email protected]

Jennie Schottmiller, LMFT, CPA is a licensed marriage and family therapist who practiced as a CPA prior to becoming a therapist. She has an active solo therapy practice and runs a facebook group for clinicians and offers courses to help small business owners with accounting, tax and financial analysis matters.

Disclaimer: This blog is for education only. Please consult with a qualified professional when you have any questions about your personal accounting, tax or legal situation. Information contained in this post is for informational purposes only and not intended to replace professional advice.

Main Blog Page
Close

50% Complete

Two Step

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.