How Do You Find a Financial Advisor? (Part 2)
Find out the best places to find financial advisors, tips to research their backgrounds, and how to prepare to meet with them for the first time.
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[Podcast episode 320]
Sometimes we need professional help to accomplish our financial dreams. Working with someone you trust can be the best way to flesh out your goals and create a solid financial plan.
In Part 1 of this 2-part series I gave an overview of 3 common types of advisors and how they can help improve your financial health. In part 2, you’ll learn the best places to find these advisors, tips to research their backgrounds, and how to prepare to meet with them for the first time.
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No matter if you’re looking for a new financial advisor, a house cleaner, or a hair stylist, ask people you know for recommendations. There’s no substitute for getting referrals from friends or family who will give you straight information.
But what if you don’t know many people or your contacts have never used a financial advisor? Fortunately, there are some great websites that make it easy to find an advisor.
How to Find a Certified Financial Planner (CFP)
The first type of advisor that we covered in part one is a Certified Financial Planner or CFP. Find one in your area at CFP.net or letsmakeaplan.org. Both sites are run by the CFP Board, which is a non-profit organization that sets and enforces the standards for CFP certification.
You can search for a CFP by zip code, city, or state. You can even narrow down results by the language an advisor speaks, his or her specialties (such as divorce issues or debt management), the minimum amount of money you must have to invest, and how the planner charges clients.
Though being a CFP comes with instant credibility, never hire one without making sure his or her certification is up-to-date. Additionally, at letsmakeaplan.org you can see if an advisor has been in disciplinary trouble with the CFP board or declared bankruptcy in the past 10 years.
Before choosing an advisor, interview several by asking questions about how they work and what they do to help clients. For instance, find out exactly how they’re paid. An advisor could earn commissions on products you buy (such as an investment fund or life insurance), bill an hourly rate, charge a flat rate, or receive a combination of these types of income.
A growing number of planners are fee-only, which means that they don’t earn commissions. They might charge a flat fee, such as $750 to analyze your situation and create a customized financial plan. A benefit of using a fee-only advisor is that they don’t have an incentive to steer you toward particular high-commission products.
The National Association of Personal Financial Advisors (NAPFA) at napfa.org has a database of fee-only advisors. These professionals might be a CFP or hold other types of credible financial designations, such as Chartered Financial Consultant (ChFC) or Certified Public Accountant (CPA).
Though there’s no rule that you have to work with a planner in your area, having a face-to-face meeting with him or her is the best way to know how well you might work together. If you can’t meet in person, consider meeting using a Skype video call.
See also: 3 Money Rules You Should Never Break