Barbara O'Neill, Ph.D., CFP®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension
When seeking assistance with personal finances, two of the most frequent questions that people ask are “where can I find local financial services professionals?” and “how much do they charge?” The following are some process steps for selecting a financial advisor:
Define Your Needs - What kind of services do you want? Are you looking for comprehensive financial planning services which would include someone to give you advice, help you implement that advice, and be there when you need them? Or, on the other hand, are you simply looking for answers to specific questions or someone to review your financial situation on a one-time basis?
Check Credentials - What credentials, licenses and education does an advisor have? Look for specialized training in financial planning such as the Certified Financial Planner® (CFP®) license. To determine if a financial planner is a CFP® licensee, ask to see the planner’s current Certified Financial Planner Board of Standards certificate or check the Web site https://www.letsmakeaplan.org/ for the names of CFP licensees.
Look For Registered Investment Advisors - Because investment advice is often involved in financial planning, a financial planner also should be a Registered Investment Advisor or affiliated with a Registered Investment Advisory firm. This registration is issued by the U. S. Securities and Exchange Commission or a state securities regulatory agency (depending upon the amount of assets under a firm’s management).
Evaluate Experience - Practical experience counts for a lot in the financial services industry. Look for someone who is both well trained and has worked with clients for a period of time. CFP® licensees, for example, must have at least three years of financial services experience. Also find out what industry organizations an advisor belongs to. Membership indicates a commitment to professional development
Consider Specializations - Find out what areas and/or types of clients an advisor specializes in. Because financial planning is such a broad field, many planners concentrate their work in certain areas of personal finance or in with clients of a certain age or other demographic characteristics (e.g., women, military families, and LGBTQ individuals). Determine if a planner’s specialties match your situation.
Consider Compensation – Financial advisors are paid by fees, commissions or a combination of fees and commissions. Fees may be charged hourly or as a flat amount for a specific set of services. Some advisors also charge fees based on the value of a client’s assets that they manage (e.g., 1.0% of $1 million in assets = $10,000). Ask how a financial planner is compensated before you enter into a working agreement.
To obtain information about local certified financial planners, check the following sources:
- CFP Board
- Financial Planning Association (FPA)
- National Association of Personal Financial Advisors (NAPFA)
- XY Planning Network (XYPN)
- Garrett Planning Network
At each web site, you will be asked your ZIP code and will be given the names of local CFPs. Once you receive these names, call several planners and find one that you like and trust. Several planners may be equally competent, but you should choose the one with whom you feel most comfortable.
For additional information about choosing a financial advisor, review this chapter in the Cooperative Extension Investing for Your Future online home study course.