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Finding A Financial Planner


"Using The Financial Planner KIT"


I have long maintained that most people do not really need to worry about finding a financial planner. I believe this because in most cases personal finance just comes down to spending less than what you bring in. And with the tools that are available nowadays, like personal finance software, available fund listings, informational products on the market etc, doing it yourself can be easier than you may think.

However I do realize that there sometimes can be more complex situations when dealing with money, investments, tax, law etc. And I also realize that sometimes people feel more comfortable with somebody helping them. So here is some information that will help you out if you are looking for a financial advisor to work with:

Now, when you are dealing with the issue of finding a financial planner, there are three basic components that you want to consider:


Yes, you want to have your financial advisor KIT in order if you want to make a good decision. You want somebody who is knowledgeable (obviously), someone who is independent (I will explain), and you want someone who you can trust. It is important to note, that the first two criterions ultimately lead to the third, which is by far the most important! But first...


Before you get to the aforementioned components, you must have some type of goal in mind. How can your advisor (or whatever this person is going to be called) help you get to where you are going if you don't know where you are going? If you don't know what you want, then you will end up doing what your advisor thinks you should do. So you may be interested in retiring with enough money to get buy on and live comfortably, while she or he may be trying to make you (or themselves for that matter) rich.

I have seen many scenarios where an advisor put a person in "risky" investments with the objective of getting that person wealthy when the person really just wanted to be comfortable and that person ended up losing money. So you want to have a clear goal mapped out, and that way you can communicate that clearly with whoever your advisor is.

Also, when you know exactly what you want, then you will know what info to ask for as it relates to what products or services your perspective advisor can offer.


You will want to know how much it will cost you and how the advisor be compensated. If the hiring fee is too much, then it might outweigh the benefits of having any help at all. For the most part, your planner will fall into two categories; fee-only financial planners, and commission based planners. Which type is better?

Many people say that you should work with a fee only financial planner as opposed to one who works on commission. The theory is that if you use a fee only planner that doesn't get paid commission on the products sold, that he or she will be more likely to sell the products that benefit you rather than the products that they get paid the most commission on. Now this is true, especially in the case of insurance. Higher commissions are one of the biggest reasons that "agents" sell whole life rather than term life insurance (even though a lot of them buy term for themselves).

However, when it comes to investments, there are other factors to consider. Now, if you choose an investment advisor that is fee only, you will obviously keep all of your money. Those commissions can add up over time (especially if you've got big bucks in your portfolio). On the other hand, when a commission based advisor has a lot of clients, they develop what are called assets under management (the amount of accumulated commissions from all of his/her clients). These assets under management are a source of income for the advisor. Therefore, if the funds that the advisor has his clients put their money in fails, that advisor will lose all of her/his money also!

So in that sense, a commission based planner often has more of a vested interest in the clients than a fee only planner. You see, a fee only planner can put you in a fund that loses so much that you OWE the company for investing in them, and it may not matter because he/she is paid already. Although, phone calls can get nasty! You can also call your commission based planner 1000 times and they will have to see you (free) if they don't want to lose your business. You can call your fee only planner 1000 times to meet you if you want to pay 1000 times the fee.

Now the points that I just gave you are generalizations. There are advisors who may be compensated using a combination of both fee and commission. So before you dive in, make sure that you examine the pay structure and do what is best for you short and long term. I won't recommend one either way. The choice is yours. But either way... Trust is the biggest factor.


When the blind lead the blind... I'll let you finish this statement. You obviously want someone who knows a thing or two about finance before you invest your money with them. So you will want to find out if your perspective candidate knows what he or she is talking about. The BEST way to find this out is to ask questions! This is why having a goal in mind is important. You have to know what you want, and that way your advisor can't dictate it. You want an advisor who puts the priority on your needs and objectives. That should be the focus of your interview.

Now, you will want to educate yourself to a degree on the various things that you need help in. That way you will know that you are not getting the run around when he or she speaks. You also want to be able to challenge him or her on some things, and make that person explain themselves so that you can feel more comfortable. You are looking for specific and direct answers from this person as opposed to vague ones. And if this person does not know an answer, are they honest enough to tell you and go and get the correct answer, or do they B.S. you around?

This interview process should not be a one way encounter. A good advisor will ask you questions about your situation so that they can better understand your needs and they may also give you answers to some questions that you may have not known to ask. It is important that they believe in educating you (explaining things to you so that you can understand “the why”) rather than just telling you what you should do.

But, what about certification?

Yes, certification is important. You don't want any ole Tom (who feels like a genius because they just stayed at a Holiday Inn Express) to give you advice on your hard earned money. Now there are a lot of different certifications out there. Here are a few:

  • Insurance Agent: Insurance agents are licensed by the state in which they work and sell insurance products. Most states have an ongoing continuing education requirement and various licensing requirements.
  • Certified Financial Planner: A CFP® earns that designation by passing an exam which covers a plethora of financial planning topics, such as insurance, employee benefits, investments and securities, state and federal income taxation, asset protection, retirement planning, and estate planning. They have to adhere to a certain code of ethics and they also have to have years full-time or at least 2,000 hours per year part-time experience in a financial planning field. They also have a continuing education requirement.
  • Certified Public Accountant: A CPA earns that designation by completing a college-level program in accounting, and passing a comprehensive test on accounting principles, and completing the specific requirements of whichever state they practice in. As a CPA, you can also earn what is called the Personal Financial Specialist or an Accredited Personal Financial Specialist designation by satisfying some additional requirements.
  • Chartered Financial Analyst: A CFA earns that designation by holding an undergraduate degree from an accredited university, passing a series of three exams taken over a multi year period and gaining four or more years of work experience in the investment industry. CFA charter holders must have detailed knowledge in investment management and they also have to adhere to a code of ethics.

There are many other titles out there such as Mortgage Broker, Mortgage Originator, Registered Investment Advisor, Registered Representative, etc.

Now, whoever it is that you are sitting down with should be certified in whatever it is they are selling (whether it is insurance, investments, loans, tax info etc). So you may want to ask for whatever certifications the person has if you are unsure. And, if you are looking for some type of specialized help, then the aforementioned titles may mean a lot to you.

But I must caution you. There is a reason that I put the info about asking questions before the certification information. Don't get caught up in how many “certifications” a person has. I have personally seen ultra-certified, ultra-degreed "agents" work over a consumer. And I have seen, in many cases, a much better job done by somebody who went and took a few tests, but worked with a company that believed in doing the right thing. A person can do the wrong thing for a client (something that pays the highest fee or commission) and claim that they felt they did the right thing. And as long as they didn't break any "laws" or "codes" then nothing can be done. So in some cases “codes of ethics” may sound good, but it may not produce the desired effect.

A lot of individuals go out and get special certifications, not to make themselves a better planner, but simply because it adds credibility. They know that having that “certification” will secure more customers. So in some cases a certification can be a marketing ploy.

It’s kind of like a money back guarantee. Sure, the person or company who promotes it may have to give money back sometimes, but having the guarantee will bring in more sales than will be lost because it will make customers feel comfortable. It doesn’t necessarily mean their product is any better than others that don’t offer a guarantee.

And, if you have $500 dollars left at the end of each month and you want to know whether you should put that money in an emergency fund, buy some life insurance or invest it, 1000 years of experience in employee benefits, estate planning, tax law and accounting will not get you the correct answer. That's why asking the right questions and being educated yourself are more important than the plaques on someone’s wall. And also, no matter how much certification a person has, you want someone who has...


An independent planner is a planner who does not represent a specific company with regard to the products that they offer. This is very important. So, not only do you want someone who can offer all the products and services you need, but you ideally want someone who doesn't work for a specific company and is not limited in what she or he can sell you. Let's say you want to buy a home. So you call someone who represents "company A", and they recommend that you take the "Company A" Loan (of course). The "Company A" Loan may be a good deal, but it may not be! B, C, E, and Q may be better options. So if you go to an "independent" advisor or broker (the name will depend on what product is being sold) who can offer you A-Z loans, then you will have a better chance of getting the best deal.

It is true that an independent advisor may charge a fee for brokerage (depending on what product is being sold), but in the end; you will get a better deal going this route (in my opinion). "A" company reps can only offer "A" products and services. Independent planners are also more accountable because they are responsible for themselves and their own actions and reputation rather than a specific company. These same rules apply to investments, insurance etc.

NOTE: If a person says they are independent, make sure you ask them to give you some of the companies that they work with. There are some individuals (believe it or not) that will charge a brokerage fee when there is no brokeraging (for lack of a better term) going on. In other words, they can’t give you an option between multiple companies. You are basically paying them to be a middleman when you can go straight to that company and get the same product without paying the fee. Now of course, a person who is not "tied" to one company is a person that is easier for you to...


Outside of intuition, there is no way you can know for sure who has your best interest at heart. But there are some things that you can do to help ensure that your representative is reputable.

In the case of investing, you can ask for a copy of their ADV Form II and see if they have been disciplined (in the area of their work) or sanctioned in the past.

You can also seek out someone who is a member of the National Association of Personal Financial Advisors (NAPFA), or the Better Business Bureau. These things may add credibility, but then again, they may not. It’s all about what makes you feel comfortable.

More importantly, there are a couple of questions that you can ask that will bring you closer to a trustworthy and competent advisor.

1. Does this person have any good referrals? If you can get some good genuine testimonials (maybe from some of the persons past and/or present clients) it can go a long way towards making you feel comfortable with your advisor. There are some advisors who work by word of mouth, and others who work by advertisement. Word of mouth is always the best route.

2. How long has this person been in business? If a person has been in business for a long time AND has good referrals, then there is more of a chance that you are dealing with someone reputable. This question is also important because you want to deal with someone who has seen the good and bad times in the economy. A lot of financial planners pop up when the economy is great (or supposedly great), but a lot of them pop right back down and out when times get rough. You want someone who can get you through the good and the bad.

Last but not least, you will want to interview multiple advisors to so that you can see what people out there are offering and you can shop around and get the best value for your dollar.

Hope this article was helpful,

So until next time,

Free Your Mind... Online

Matt Mason

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