How To Choose A Financial Planner

Choosing a Financial Planner – 5 Factors Seniors Should Consider


Whether you’re approaching retirement, or are already retired, there’s no better time than right now to make sure your finances and important documents are in order. For your legal documents, such as trusts and wills, it’s best to locate an elder law attorney. To help you organize your finances, you’ll want to contact a financial planner or adviser.

A financial planner is a professional consultant who prepares financial plans for individuals. A financial plan is a detailed strategy tailored to a senior’s specific situation and financial goals. The financial planner considers all questions, information, and advice as it impacts and is impacted by the entire financial and life situation of their client. In addition to providing advice, a personal financial planner can also help a senior citizen secure a wide variety of financial products, including investments and trusts.
 

However, unlike your family doctor, who must have several college degrees to practice medicine, financial planners are not required to meet such standards before dispensing advice, so it’s important to choose wisely.

 

5 Factors to Consider When Choosing a Financial Planner

1.    Credentials
The financial planning world contains an alphabet soup of designations with widely varying educational requirements. To help sort through this confusing array of designations, seniors can look for a certified financial planner (CFP), of which there are 70,000 in the United States. A CFP must pass the equivalent of six college courses on topics including estate planning, insurance, investments and financial planning, then pass a two-day comprehensive exam, which has a pass rate of just 60%. Continuing education also is required to maintain the accreditation. A CFP who provides financial planning services pledges to work with his or her clients as a fiduciary, which means he or she must hold the client’s interest above his or her own in all matters.


 

2.    Services offered
Many who call themselves financial planners offer only investment advice. Advisers who offer comprehensive financial planning services are able to better serve the needs of seniors. Comprehensive planning should include life, estate, disability and property/casualty insurance monitoring, debt, and cash flow planning. Services may include management of all assets, both those directly managed by the planner and those in 401(k) plans not held by the planner.

 

3.    Payment
There’s no best or right way to pay for financial advice. Planners can be compensated in a number of different ways: hourly fees, fees based on assets under management, commissions on product sales, or some combination of these. The important part is to understand how a prospective planner charges and what you will pay for, so you can judge whether you’ll be getting value for what you pay.

 

4.    Disciplinary history
Ask the planner what boards he or she is regulated by, such as the Financial Industry Regulatory Authority (FINRA), state insurance departments, or CFP Board, and check with these regulators about any disciplinary history. A good place to start is FINRA’s BrokerCheck site, which can be found here.

 

5.    Experience with seniors
Seniors have unique financial planning needs due to their stage in life. They need to plan how to make their retirement savings last the rest of their lifetime. They need to consider their health and what medical costs they may incur. And they need to plan for their legacy should they choose to leave money behind for a spouse or as an inheritance to other family members. As such it makes sense to choose a financial planner who understands the needs of seniors and devotes a significant portion of their practice to advising them.

 

 

BLOG Date: Thursday, June 11, 2015
Writer: Ryan Allen