Nine Issues to Consider When Selecting a Financial Planner

By Hank Brock

First, is the financial planner experienced? Years of education will do little if your advisor doesn't have the applied experience necessary. You should ask them about the breadth of the problems that they have solved, their existing clients, and their depth of experience. You may not consider your questions to be complicated, but you are likely unaware of the myriad of strategies the advisor could pursue in your behalf. It often takes years of apprenticeship for the planner to be prepared to approach the issues that you may face. This can be especially true in the areas of estate and tax planning. There are many novices out there presenting seminars with only a basic understanding of the principals they are teaching.

Second, what credentials does you consultant hold? You should be looking for legitimate and recognized credentials. Common credentials include: ChFC, CFP, CPA, CLU, JD, or other genuine designations. An advisor with only a CSA (Certified Senior Advisor) designation should be avoided. Designations such as this only require a quickie course and minimal knowledge of real financial principles.

Third, is the planner committed to high ethical standards? The advisor should hold membership in at least one industry association (Society of FSP, NAIFA, etc.). Most of these associations require adherence to a code of ethics. Of higher concern are planners that use their affiliations to bypass the establishment of trust.

Fourth, is there a commitment to continuing education? Complex laws are ever-changing and the economy never holds still. How many hours are spent each year keeping skills sharp? Are the continuing education hours at a beginning, intermediate, or advanced level?

Fifth, does the advisor handle the services you need? Consider whether you need comprehensive financial planning, tax planning, or investment advice. Will you need help with securities, or simply need someone to give tax advice? Is the planner simply an insurance salesman? Find the consultant that specializes in the services that you need.

Sixth, is your advisor a solo-practitioner? Or is your advisor part of a team that he can turn to for strategizing on complex issues? Or to bring an additional perspective? Is his firm large enough to provide the extensive resources as a large firm of pros?

Seventh, what is the advisor's average client like? Do you fall into the range of his typical client, and if not, will you receive the attention that you need? Would someone else at the firm give you better attention? What is the general demographic that the advisor primarily works with (seniors, pre-retirees, young couples, etc.)? You want to make sure that your unique needs will be met.

Eighth, how is the consultant compensated? The three most common planning types include: fee-only, fee-based, and commission only.

Finally, is your advisor a professional? Be wary of persons who are merely part-timers working out of the trunk of their car, lack membership in professional societies, omit commitment to continuing professional education, and criticize others who do commit to high standards. Often they will downplay the need for education, or boast they "know more about estate planning than most attorney's out there." Smooth salespeople are often very charming, and may even present a charismatic public seminar-but they may also be dangerous because they don't know what they don't know.

About the Author:

Hank Brock is president of Brock and Associates, LLC, a firm specializing in retirement, estate, tax, and business planning. Be sure to check out Hank's article on finding a financial advisor for more extensive information.