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Finding a Financial Planner
Selecting the Right One for Your Family By Amy Carey
Friends and family can also provide references. "Most of my referrals come from my existing client base," says Dan Liberatore, a certified financial planner (CFP) in Toronto, Ontario, Canada. Sue Parmet of Pound Ridge, N.Y., found one of her family's financial planners through her sister-in-law and another through a family friend.
When soliciting referrals from friends or family members, keep your special circumstances in mind. "A planner that may have been good for one family may be incapable of dealing with another due to unique circumstances," Moody says. Ask around for information about a planner who has dealt with clients whose needs were similar to yours. For instance, if you own a business, ask fellow business owners whom they work with and whom they avoid.
Moody suggests you contact five or more candidates. Then draw up some important interview questions to screen the great from the not so great. Among them: What is their experience? Find out the number of years they have been in the business, where they have practiced and what types of clients they have handled in the past. The common wisdom is to find someone with at least 10 years of experience. "Since there are no residency programs for planners, a lot of time is necessary before a planner can figure out just what is going on and apply it to real life," Moody says.
If you find you are comfortable with the planner's experience level, askabouthis or hercredentials. "Many planners have the CFP designation," Elder says. "However, credentials only show that you can sit in a class and take tests. Look for experience." According to Moody, you should even consider seeking someone with a degree in financial planning, not just a CFP designation. "After all, this is serious business, and you want someone who is committed beyond a semester's worth of work," he says.
Next, look at how the candidate is paid. "A planner who makes money by commissions will only be interested in selling you something," Elder says. "Seek 'fee-only' advisors." You pay a fee-only advisor a set amount to perform services for you, the client. With this type of advisor, you shouldn't have to worry about being sold financial products you might not need, such as annuities, life insurance or mutual funds, since the planner is not dependent on commission from the sale of these services. Ask yourself: "Do you want a salesperson or an advisor?" Elder says.