10 Questions to Ask When Choosing
a Financial Planner
You may be considering help from a financial
planner for a number of reasons, whether it's deciding to buy
a new home, planning for retirement or your children's education,
or simply not having the time or expertise to get your finances
in order. Whatever your needs, working with a financial planner
can be a helpful step in securing your financial future.
The questions in this brochure will help
you interview and evaluate several financial planners to find
the one that's right for you. You will want to select a competent,
qualified professional with whom you feel comfortable, one whose
business style suits your financial planning needs. An interview
checklist has been included for your convenience.
1. What experience do you have?
Find out how long the planner has been in practice and the number
and types of companies with which she has been associated. Ask
the planner to briefly describe her work experience and how it
relates to her current practice. Choose a financial planner who
has a minimum of three years experience counseling individuals
on their financial needs.
2. What are your qualifications?
The term "financial planner" is used by many financial
professionals. Ask the planner what qualifies him to offer financial
planning advice and whether he holds a financial planning designation
such as the Certified Financial Planner mark. Look for a planner
who has proven experience in financial planning topics such as
insurance, tax planning, investments, estate planning or retirement
planning. Determine what steps the planner takes to stay current
with changes and developments in the financial planning field.
If the planner holds a financial planning designation, check
on his background with the CFP Board or other relevant professional
3. What services do you offer?
The services a financial planner offers depend on a number of
factors including credentials, licenses and areas of expertise.
Financial planners cannot sell insurance or securities products
such as mutual funds or stocks without the proper licenses, or
give investment advice unless registered with state or Federal
authorities. Some planners offer financial planning advice on
a range of topics but do not sell financial products. Others
may provide advice only in specific areas such as estate planning
or on tax matters.
4. What is your approach to financial
Ask the financial planner about the type of clients and financial
situations she typically likes to work with. Some planners prefer
to develop one plan by bringing together all of your financial
goals. Others provide advice on specific areas, as needed. Make
sure the planner's viewpoint on investing is not too cautious
or overly aggressive for you. Some planners require you to have
a certain net worth before offering services. Find out if the
planner will carry out the financial recommendations developed
for you or refer you to others who will do so.
5. Will you be the only person working
The financial planner may work with you himself or have others
in the office assist him. You may want to meet everyone who will
be working with you. If the planner works with professionals
outside his own practice (such as attorneys, insurance agents
or tax specialists) to develop or carry out financial planning
recommendations, get a list of their names to check on their
6. How will I pay for your services?
As part of your financial planning agreement, the financial planner
should clearly tell you in writing how she will be paid for the
services to be provided. Planners can be paid in several ways:
* a salary paid by the company for
which the planner works. The planner's employer receives payment
from you or others, either in fees or commissions, in order to
pay the planner's salary.
* fees based on an hourly rate, a flat rate, or on a percentage
of your assets and/or income.
* commissions paid by a third party from the products
sold to you to carry out the financial planning recommendations.
Commissions are usually a percentage of the amount you invest
in a product.
* a combination of fees and commissions whereby fees are
charged for the amount of work done to develop financial planning
recommendations and commissions are received from any products
sold. In addition, some planners may offset some portion of the
fees you pay if they receive commissions for carrying out their
7. How much do you typically charge?
While the amount you pay the planner will depend on your particular
needs, the financial planner should be able to provide you with
an estimate of possible costs based on the work to be performed.
Such costs would include the planner's hourly rates or flat fees
or the percentage he would receive as commission on products
you may purchase as part of the financial planning recommendations.
8. Could anyone besides me benefit from
Some business relationships or partnerships that a planner has
could affect her professional judgment while working with you,
inhibiting the planner from acting in your best interest. Ask
the planner to provide you with a description of her conflicts
of interest in writing. For example, financial planners who sell
insurance policies, securities or mutual funds have a business
relationship with the companies that provide these financial
products. The planner may also have relationships or partnerships
that should be disclosed to you, such as business she receives
for referring you to an insurance agent, accountant or attorney
for implementation of planning suggestions.
9. Have you ever been publicly disciplined
for any unlawful or unethical actions in your professional career?
Several government and professional regulatory organizations,
such as the National Association of Securities Dealers (NASD),
your state insurance and securities departments, and the CFP
Board keep records on the disciplinary history of financial planners
and advisers. Ask what organizations the planner is regulated
by, and contact these groups to conduct a background check. (See
listing at back.) All financial planners who have registered
as investment advisers with the Securities and Exchange Commission
or state securities agencies, or who are associated with a company
that is registered as an investment adviser, must be able to
provide you with a disclosure form called Form ADV or the state
equivalent of that form.
10. Can I have it in writing?
Ask the planner to provide you with a written agreement that
details the services that will be provided. Keep this document
in your files for future reference.
Copyright © 1997- 1999,
Certified Financial Planner Board of Standards, Inc. All rights
The information in this brochure is provided as a public service
by the Certified Financial Planner Board of Standards. A nonprofit,
professional regulatory organization, the CFP Board exists to
benefit consumers by fostering professional standards in personal
financial planning. This publication may be reprinted for educational
and nonprofit purposes only. Copyright © 2000, Certified
Financial Planner Board of Standards, Inc. All rights reserved.
CFPTM, CERTIFIED FINANCIAL PLANNERTM
and are marks owned by the Certified Financial Planner Board
of Standards, Inc. These marks are awarded to individuals who
successfully complete the CFP Board's initial and ongoing certification