How To Select A Qualified Financial Advisor

By Jon L. Ten Haagen

About a year ago I wrote a piece on ‘How to Choose a Qualified Financial Planner.’ We spoke of the qualifications to be a ‘financial planner’ (none) vs. a Certified Financial Planner (CFP), which is a result of a lot of education and training. And what organizations to call to check on the records on a planner.

Now, I want to get into the specific questions you should ask a potential planner, and what answers you should hear. Here is how to get the most value from your appointment.

Your relationship with your CFP is a partnership. The better you are able to communicate your needs and understand your options, the more productive your appointment will be, and the more likely you are to get the guidance you need. Before your appointment, gather all our financial documents, bank statements, investment statements, insurance policies, tax filings (at least one year) wills, trusts, etc., to bring with you. Have in mind what you are not satisfied with your current advisor(s). Think about where you are now financially and where you would like to be, and then together we can create a game plan to get you there. Write down the questions you want answered. The time you have with your CFP is all too brief. A little preparation will help you make the most of it.

Financial planning is not a destination, it is a journey. Think of an aircraft carrier: The captain says turn 80 degrees to port (to the left), but the ship is over 1,000 feet long and weighs in at 100s of tons. It does not turn on a dime, it takes time and many adjustments. This is how financial planning works too. Be prepared to put in the time. The Captain (your CFP) can’t do it all. The crew (you) have to give input so you are all on the same course.

When selecting a financial advisor trust is a key factor, but not the only one. People are stressed for time with family, work and financial pressures. Increasingly they are turning to advisors, but how do you pick one?

Let’s eliminate some! Your barber, your bus driver, your hairdresser, your third cousin once removed, the person you overheard on the train, they are not advisors. What they offer is gossip, or a guess, or a ‘tip’. This is not advice.

So, let’s put together a list of basic questions to ask a prospective financial advisor:

-What licenses, certifications and qualifications do you have?

-How much experience do you have? How long are you in the business?

-What services do you offer? Just the products your company sells?

-Will I be working with you or with an associate?

-Do you get fees for referring me to other professionals?

-How much do you typically charge for your services? Are you paid by fees or commissions or both? Please explain.

-Have you been the subject of any professional and/or government regulatory disciplinary proceedings?

-Will I get a personally designed analysis of my needs and goals, and the method of reaching them in writing?

-How do I pay for your services?

-What is your investment style?

-Do you offer a limited range of products?

-Can I get everything in writing?

-Have you ever been sued by clients or lost arbitrations to them?

Whatever you are looking for in a CFP, your search should begin here, with a study of the CFP’s background and professional qualifications. Make sure the CFP is board certified (currently) so you’re getting the services you need and want by someone who is qualified to assist you with your specific financial and investment goals and needs. Pay special attention to factors that distinguish this CFP from others you’re considering. Does the CFP have more experience working with your needs? Has the CFP received special honors, or disciplinary sanctions? For more details, use the Financial Planning Association (FPA) website to confirm and verify information critical to your future.

In a perfect world, the right CFP would be right around the corner. In reality, you may need to sacrifice some convenience to find the CFP who best meets your needs.