How to Choose a Qualified Financial Advisor

When you choose a family physician, whether you find them in your insurance directory or as a referral from a friend, you trust they have the proper credentials, training and experience to give quality medical advice. There is a regimented process one must follow to become a physician and we believe in this process.

In the financial services industry there are no such requirements for education, experience or training that determine whether you may call yourself a financial planner. Individuals with criminal records can obtain securities licenses as long as their crimes were not securities related. Obtaining a securities license simply makes it legal for them to receive commissions on the sale of investment or insurance products: it does not mean they have the knowledge to provide quality advice.

If you are looking for a financial advisor, look for someone that has the CFP® or Certified Financial PlannerTM designation. In order to use this designation, professionals must meet the CFP® Board’s education and experience requirements, and agreed to their code of ethics.

You can learn more about this designation at www.cfp.net, or you can search for a financial planner that has this designation on the Financial Planning Association’s (FPA) web site www.fpanet.org.

In addition, look for a planner who is fee-only. Many planners use the term “fee based” which means they can charge fees to prepare a financial plan and charge commissions on the investments or insurance products you may buy. Fee-only means the advisor can not accept commissions. Think about where the advisor’s paycheck comes from, and that will tell you where their loyalty lies. When their paycheck comes directly from you, your interest’s come first. You can go to www.napfa.com, the National Association of Personal Financial Advisors web site, to search for a fee-only planner.

You want to look for someone with a minimum of 4 years experience, and preferably experience dealing with people similar to you. If you are a small business owner, make sure they are familiar with tax issues particular to your situation. If you work for a large corporation, make sure they understand the various types of employee benefit packages. If you are about to retire, ask them how they might structure a portfolio that produces consistent income, instead of being solely invested for growth.

Throughout your search, remember you are hiring a Chief Financial Officer for your family. You want that person to be competent and trustworthy. They should explain things to you in language and terms that you can understand.

Just as the right physician can add years to your life, the right financial advisor can add thousands of dollars to your net worth. Take the time to find the right person for the job.