October is National Financial Planning Month | 5 Questions You Should Be Asking When Hiring a New Financial Planner

Throughout the year we like to highlight national observances that pertain to Platinum Wealth Solutions of Texas. October is National Financial Planning Month, probably the most important topic to us. We believe that our financial professionals should act as fiduciaries and positively impact lives, lifestyles, and legacies. Planners should take into account their clients’ current financial position and needs while helping them create strategies that align with their long-term goals. It is important that you trust your financial professional to provide objective advice that is in your best interest. Hiring the right financial planner can be difficult, so we have compiled 6 questions that you should ask before committing to a new relationship.

Question #1: How Long Have You Been Practicing?

If experience is important to you, you should definitely ask them how long they have been in the industry. Most financial planners are qualified, but if you are uncomfortable with somebody that is newer to this role, this could be a deal breaker. If they haven’t been practicing for very long, they may be able to explain how they leverage experience and knowledge from other advisors in the firm.

Question #2: What Are Your Credentials?

To use the title “Financial Planner” at our firm, our financial professionals must have passed their life & health insurance license exam, SIE exam, Series 7 exam, and Series 66 exam.  Beyond the requisite registrations, planners may also have professional designations. Some popular examples in the industry include Chartered Financial Consultant (ChFC), Chartered Life Underwriter (CLU®), Accredited Investment Fiduciary® (AIF®), Retirement Income Certified Professional® (RICP®), and CERTIFIED FINANCIAL PLANNER™ (CFP®). While these designations do not guarantee the quality of a financial planner, to acquire these designations, they must pass an exam and maintain their registrations through continuing education. To become a CFP®, the planner must have a minimum of three years of experience, meet regulated educational requirements, and professional standards.

Question #3: Who Do You Serve?

Many planners are willing to work with anyone, regardless of age, income, or profession. Others prefer to work with more specific markets – doctors, educators, small business owners, people within their culture, employees at specific business, etc. Finding a planner who works with others like you is a great way to make sure they will understand your specific needs and be familiar with options available to you.

Question #4: Do You Have References?

This can sometimes be difficult for planners to provide. Some companies prohibit planners from soliciting references or even allowing reviews online. Broker Check by FINRA allows you to see a planner’s history. This includes years of experience, exams passed, and any complaints made against them during their entire career in the industry. If you do not have an planner in mind, the CFP® board’s website or NAIFA Connect are good places to search for a financial planner. 

Question #5: How Are You Compensated?

There are essentially 3 models that financial planners use to get paid:

• Fee-Based Planning Model –This model involves a monthly or annually paid fee to compensate the advisor for the time they will need to spend.
• Compensation Model – This model is paid on an agreed upon percentage basis.
• Hybrid Model – A combination of a Fee-Based Planning Model and a Compensation Model where both the fee and percentage basis are usually lower.

No one approach is best for every client, so you will need to decide which approach makes the most sense for you. Some advisors offer two or all three of these models, so you may have options without needing to find a different planner. You will want to make sure your planner is transparent and clear when discussing how they are compensated so you know what you’re expected to pay and the services you will receive. 

Asking yourself and any prospective planner these questions is an important step towards hiring the right person for you and your family. You’ll want to work with a planner who you can trust and that caters to your specific needs. They should be able to help you balance your ability to live comfortably today while preparing for a sound retirement.

 

The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.