A financial planner is a type of financial advisor who can help you set and meet long-term goals like saving for your children’s college education, retiring by a certain age or planning out your estate. Some financial planners double as investment advisors, which means they can also help you with your investments. However, choosing a financial planner can take some time, as you want to ensure you’re making the right call for you and your family. If you want help finding a financial advisor or planner, consider using SmartAsset’s free matching tool.
Understanding Financial Planning Services
Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. This can involve multiple areas of finance, from investing and retirement to taxes, your estate, insurance and more. Financial advisors who manage investments for clients often double as planners themselves, offering their services on a standalone or recurring basis.
Identify Your Needs
Understanding what you’re hoping to accomplish by hiring a financial planner is a critical first step in finding the right professional to work with. A person looking for a money manager has different needs than someone who is looking for a holistic financial plan that touches on retirement planning, philanthropic giving and tax planning.
Your financial planning needs may encompass a variety of topics, including:
- Retirement planning
- Education saving
- Debt analysis
- Estate planning and trust creation
- Philanthropic giving
- Insurance needs
- Tax planning
- Business exit planning
By assessing your financial situation and identifying your personal needs, you can narrow your search for a financial planner and hire the right one. For instance, if you need specific help creating a trust and planning your estate, you’ll naturally want to hire an advisor who offers estate planning services. If you’re looking for someone to manage your money, in addition to creating a full financial plan, you’ll focus your search on advisors and/or firms that offer comprehensive wealth management.
Research Potential Financial Planners
Once you’ve determined what kind of services you need from a financial planner, you can begin to compile a list of potential candidates. SmartAsset’s free matching tool can pair you with up to three advisors in a matter of minutes after taking into consideration your time horizon, income and a number of other factors.
Perhaps you limit your search to advisors in your area or rely on the recommendations of friends and family. You can also use online databases to find advisors in your area. Here are several services to consider:
- Garrett Planning Network
- XY Planning Network
- National Association of Personal Financial Advisors
- Financial Planning Association
When you’ve put together a short list of potential planners, you’ll want to start looking into their backgrounds, levels of experience and any certifications they may have. Here’s a look at some of the most common financial certifications:
- Certified financial planner (CFP)
- Chartered financial analyst (CFA)
- Accredited investment fiduciary (AIF)
- Certified public account (CPA)
- Chartered financial consultant (ChFC)
When researching individual financial planners, be sure to visit their firm’s website to see what kinds of services they offer and whether they align with your needs.
Financial planners who are registered with the U.S. Securities and Exchange Commission (SEC) must submit documentation each year about their business, which can also be helpful to examine. This paperwork, known as Form ADV, will include the firm’s services, fees, investing strategies and more. Form ADVs also list disclosures of any legal or regulatory infractions the firm and/or financial planner has on their record. Depending on the seriousness of the disciplinary action, a disclosure may deter you from working with a particular advisor.
Examining a Form ADV may seem overwhelming at first, but it’s an essential step to take when choosing an advisor. SmartAsset’s Form ADV guide can help you navigate and make sense of these regulatory documents.
Interview at Least Three Financial Planners
Now for what is likely the most important step of the process: interviews. After putting together a short list of candidates, arrange a time to meet or speak with each one. Most advisors offer consultations, during which they will introduce themselves, talk about what they can offer you and address any questions you may have.
Even after researching the individual and their firm, be sure to ask about their fee structure, financial planning approach, how many clients they work with, and whether they are a fiduciary. Advisors who are registered with the SEC have a fiduciary duty to always serve their clients’ best interests. Knowing that a financial planner abides by fiduciary duty can give you the peace of mind knowing that your advisor has to put your interests first.
When choosing a financial planner, be sure to interview at least three candidates. You may be tempted to hire the first person you meet. However, speaking with at least three financial planners and comparing those conversations can provide important context in your search.
Bottom Line
Working with a financial planner can help you secure your financial future and reach your goals. Whether it’s retiring, buying a home or sending your kids to college, planning ahead is super helpful. The foundation of your search should be understanding your own personal needs and finding a planner who suits them.
When the time comes to make your decision, you’ll have a lot of information to consider. Ultimately, though, you’ll want to choose the financial professional with whom you feel most comfortable with. Trust is a critical component of the advisor-client relationship, so finding a professional who you can trust is vital. After all, this person will be playing an important role in your financial life.
Tips for Choosing a Financial Planner
- Need help finding a financial planner and don’t know where to start?Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Consider the fees that a financial planner charges for his or her services. For instance, fee-only planners only earn money from the fees they charge clients. Fee-based advisors, on the other hand, also earn commissions from selling products. This can create a conflict of interest, because commission-based compensation can incentivize advisors to recommend certain products or services for the purpose of generating a commission. Be sure that your advisor abides by fiduciary duty.
Photo credit: ©iStock.com/SDI Productions,©iStock.com/SDI Productions,©iStock.com/Ridofranz
As an experienced financial professional with extensive knowledge in financial planning and advisory services, I've worked with numerous clients to help them achieve their long-term goals and secure their financial future. My expertise spans various areas of finance, including investment management, retirement planning, estate planning, tax strategies, and insurance. I have a deep understanding of the complexities involved in creating comprehensive financial plans tailored to individual needs.
The article provides valuable insights into the role of financial planners and the importance of selecting the right professional for your unique financial situation. Let's break down the concepts mentioned in the article:
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Financial Planning Services: Financial planning involves a thorough assessment of an individual's financial situation to create a specific plan for achieving long-term goals. This includes aspects such as investing, retirement planning, taxes, estate planning, insurance, and more.
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Identifying Your Needs: Understanding your financial goals is crucial when selecting a financial planner. The article emphasizes the importance of assessing needs such as retirement planning, education savings, debt analysis, estate planning, philanthropic giving, insurance needs, and business exit planning.
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Researching Potential Financial Planners: Once you've identified your needs, the article suggests compiling a list of potential candidates. It mentions tools like SmartAsset’s matching tool and provides resources such as Garrett Planning Network, XY Planning Network, National Association of Personal Financial Advisors, and Financial Planning Association. The importance of researching backgrounds, experience, and certifications, such as CFP, CFA, AIF, CPA, and ChFC, is highlighted.
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Form ADV and Regulatory Compliance: Financial planners registered with the U.S. Securities and Exchange Commission (SEC) must submit Form ADV annually. This document includes information about the firm's services, fees, investing strategies, and any legal or regulatory infractions. It's recommended to review Form ADVs to make informed decisions about potential planners.
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Interviewing Financial Planners: The article stresses the significance of conducting interviews with at least three financial planners. Key points to inquire about include fee structures, financial planning approaches, client workload, and whether the planner adheres to fiduciary duty.
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Choosing a Financial Planner: Trust is identified as a critical component in the advisor-client relationship. The article suggests choosing a professional with whom you feel comfortable, as they will play a crucial role in your financial life.
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Tips for Choosing a Financial Planner: The article concludes by offering tips for choosing a financial planner, emphasizing the importance of considering fees, understanding different compensation models (fee-only vs. fee-based), and ensuring that the selected advisor abides by fiduciary duty.
In summary, the article provides a comprehensive guide for individuals seeking financial planning services, covering everything from understanding their needs to researching and interviewing potential financial planners before making a decision.
