Is Your Financial Planner Right for You?

meeting with a financial planner

Like any good relationship, the one you have with your financial planner should be built on trust, understanding and effective communication. When you have a good working relationship with your financial planner, you’re more likely to be successful.

So what should you look for in a planner, and what makes up a strong client-advisor relationship? Here are some of the key qualities and factors you should look for:

Your Financial Planner is qualified

Lots of people can dole out financial advice without the necessary education and experience to back it up. So make sure you’re working with a Certified Financial Planner™. 

This designation is reserved for financial planners that take certain financial planning educational courses, pass an exam with a historic pass rate of around 60%, adhere to ethical requirements, have at least three years of financial planning experience, and keep up with continuing education.

Be sure to ask when they received their CFP® mark and how long they’ve been in business. 

They are upfront about their fee structure

Financial planners tend to charge in three different ways: fee-only, fee-based and commissioned.

Fee-only means they charge a flat or monthly fee for their services. They don’t receive any commissions, referral fees or kickbacks of any kind. Your Richest Life is a fee-only financial planning firm.

Fee-based financial planners may be able to charge and deliver a financial plan, but they are also able to sell products and receive commissions.

Commissioned financial planners can sell products like insurance policies or mutual funds, and they receive a commission for those sales. 

The concern with fee-based and commission financial planners is that they get a kickback for what they sell you, so they might push more expensive products or investments that aren’t in your best interest. 

Any planner you meet with should be transparent about their fee structure and willing to answer any questions.

They make you feel comfortable

Money is difficult for so many people to talk about. It can feel particularly vulnerable laying out your whole financial situation for a stranger. So it’s important to work with someone who doesn’t make you feel judged or ashamed of your money or your goals. 

If you’re not comfortable with them, you’ll probably be more reluctant to share ideas with them or ask questions, and that’s going to stunt your financial growth.

Find someone who has your back.

They are honest about their limitations

Another sign of a good financial planner is knowing when they’re in over their head, or they’re not the right planner for someone. 

They should be able to refer you to someone who’s a better fit, or give you some ideas for what to work on first before working with them. But honesty about who they tend to work with (and don’t work with) is key to knowing they’re a good fit.

Questions You Should Ask a Potential Advisor

When you meet with a potential advisor, it helps to have a list of questions handy to determine if they’re a good fit.

I have a guide here that explains how I work and my answers to some of the questions below.

Additionally, here are question suggestions from NAPFA, the National Association of Personal Financial Advisors:

  • Are you or your firm a Registered Investment Advisor (RIA)? This means they have registered with the Securities and Exchange Commission (SEC) or their state regulatory agency as an investment advisor.
  • What is your educational background?
  • What are your financial planning designations, credentials and affiliations?
  • How long have you offered financial planning services?
  • Did a professional or regulatory governing body ever cite you for disciplinary reasons?
  • How many clients do you work with?
  • Will you or an associate work with me?
  • Will you sign a Fiduciary Oath?
  • Do you have a business continuity plan?
  • How is your firm compensated and how is your compensation calculated?
  • Do you have a minimum fee?
  • If you earn commissions, where do they come from?
  • Are you currently engaged in any other business, either as a sole proprietor, partner, officer, employee, trustee, agent or otherwise?
  • Do you receive referral fees from attorneys, accountants, insurance agents, mortgage brokers, or others?
  • Do you receive on-going income from any of the mutual funds that you recommend in the form of “12(b)1” fees, “trailing” commissions, or other continuing payouts?
  • Are there financial incentives for you to recommend certain financial products?
  • What personal financial issues will your services address for me?
  • Will you provide a comprehensive analysis of my financial situation and recommendations?
  • Do you offer assistance to implement the plan?
  • Can you offer continuous, on-going advice regarding my financial affairs, including advice on non-investment related financial issues?
  • Other than receiving my permission to debit my investment account for your fee, do you take custody of, or will you have access to, my assets?
  • If you were to provide me on-going investment advisory services, do you require “discretionary” trading authority over my investment accounts?
  • Do you have many clients like me?

About Your Richest Life

At Your Richest Life, Katie Brewer, CFP®, believes everyone should have access to financial resources and coaching. For more information on the services offered, contact Katie today.

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