Choosing a financial planner or advisor can be an overwhelming task. So many options and so many certifications to try to figure out. Where do you start?
Looking for tax advice? Your friendly neighborhood CPA might be all you need. Trying to figure out when you’ll be able to retire based on your current 401(k) balance? A financial planner or advisor might be more appropriate. Trying to figure out how much life insurance you need? Maybe your insurance agent can help. Of course, some finance professionals are licensed to help you make decisions about taxes, retirement, and insurance. Confused yet?
As with anything else, begin with your goal in mind. If you’re looking for a full, comprehensive financial plan, your needs are different than someone whose only concern is getting a college savings account open for a new baby. Once you know your goal, start asking around. Do you have family, friends, or colleagues who work with an advisor that they trust?
Once you have found someone who will help you meet your goal, don’t be afraid to interview them. Some advisors prefer to work with clients who are close to retiring while others might specialize in helping people in the early stage of their career. What certifications does the advisor hold? A quick search online will help you understand what is required to gain and maintain a particular certification. Does that certification require continuing education? Check the advisor’s reviews on BrokerCheck, a service provided by FINRA.
Finally, and perhaps most importantly, find out how your advisor gets paid. Are they looking out for their bottom line and trying to get the biggest commissions they can or are they looking out for your best interest? Some certifications include fiduciary expectations, meaning that the advisor is required to make decisions based on what is best for you, not on what will make them the most money. Fee-based advisors are becoming more and more popular and can be a great option if you want to ensure that you’re getting advice that makes the most sense for you.
Take your time! Find someone you trust and don’t be afraid to ask lots and lots of questions.