How to Choose the Right Financial Planner

Thinking about getting a financial planner? A financial planner or financial advisor can be an excellent person to help you plan out certain aspects of your finances today and in the future. If you’re looking to retire at a specific time or try an investment strategy, financial planners are certified and have the experience to recommend solutions and help manage your portfolio.

Knowing where to start can be challenging though. Using a financial planner can be expensive and all experts are not the same. As you consider whether this option is right for your financial situation, here are some key tips to follow to help you choose the right financial planner for you.

Determine Which Services You Need

If you’re thinking about working with a financial planner this year, start by getting clear on what financial planners do. That way, you’ll know which services to ask about. In a nutshell, financial planners can help you with every aspect of your financial life including current and long-term money goals.

Financial planners can help offer advice on budgeting, taxes, investments, retirement, estate planning, and even real estate. It’s important to set some initial intentions for using their services.Β  This will help you gravitate toward financial planners who have the experience and expertise to help you with areas you’re interested in learning about.

Decide How Much You Can Afford

To work with a financial advisor, you can easily pay around $200 per hour or $1,500+ per consult. This is why most people don’t look for a financial planner until they feel financially stable enough.Β  Be honest about how these fees will work into your budget. You may have to cut some expenses to plan ahead by saving up in advance to afford these fees.

Ideally, you may not want to invest in a financial planner if you don’t feel ready. For example, let’s say you have some debt to pay off or are still building your emergency fund. If you know how to do these things, you may just want to give yourself some time to reach these goals. Save the financial planner to help you with more complex concepts like investing, taxes, and saving for your child’s college education.

Seek People Who Have Your Best Interest In Mind

Not all financial planners are the same. This is why you should take the time to understand how financial planners get paid and what their commission structure is like. Generally, it’s best to go with a ‘fee-only’ financial planner. This means you pay a fee in exchange for their services.

Other types of financial planners may not charge you much, but they get paid by commission. This means they are more likely to recommend products or services that you may not really need or want just to earn their paycheck. It sounds harsh, but this is the reality of the industry.

A fee-only financial planner has no incentives to quotas to meet. They can look at your situation and objectively offer solutions that they are genuine and helpful.

Another thing you’ll want to check is if the financial planner is a fiduciary. Fiduciary duty means they are legally required to work in your financial best interest. Not all financial advisors are fiduciaries so this is a key question to ask during your search.

Here are some key tips to follow to help you choose the right financial planner for you. Share on X

Search a Database

In some rare cases, someone who’s not licensed may claim to be a financial planner or financial advisor and offer their services. Financial advisors who charge a flat fee can charge anywhere from $1,500 to $2,500 for a one-time consultation. You may not want to pay these prices to someone who’s not licensed and/or doesn’t have a proven track record.

Luckily, all licensed financial planners can be found through various databases. This a great place to start if you have no idea which financial planner you’ll select. You can use FINRA’s database to find licensed investment brokers and financial advisors. There’s also a search feature that helps you find financial planning firms as well.

XY Planning Network is another exceptional resource to help you find licensed financial planners. This website connects you to fee-only financial planners which means they don’t earn commission for offering advice. Affordable fees and virtual services set XY Planning Network apart from other financial planning resources. You can also conduct a search based on the expertise you’re looking for.

Ask For Referrals

Finally, one of the easiest ways to find the best financial planner for you is to ask around. If you know a friend, family, or coworker uses a financial advisor, see if they have a recommendation for you. Ask them what they like about the financial planner and what specific things they’ve been able to help with.

If you can’t get referrals, you can always ask a financial planner you’re considering to provide references. A good professional will have references on hand that you can talk to. Be sure to ask the references to share their honest experience and pros and cons about working with their specific financial planner. This will give you more insight to determine whether you’d be a good fit together.

Summary: Choose a Financial Planner Wisely

Choosing a financial planner that’s best for your situation and goals is not a decision to take lightly. Take your time and carefully map out what you’re looking for and which services you need. Then, look at your budget and be honest about what you can afford. Realize you may have to make some sacrifices or even work with a financial advisor with less experience to score a lower price. Still, don’t settle in terms of quality and fiduciary duty.

Have you ever considered working with a financial planner? Why or why not?