Looking for a Financial Planner? Consider This...

financeChoosing a financial planner is an important step in taking charge of your finances and planning for the future. Building a comprehensive financial plan is an essential part of ensuring your fiscal stability, but many Americans fail to do it. Certified Financial Planner Board of Standards' Household Financial Planning Survey found that only a little more than a third of the fiscal decision makers in American homes have created a comprehensive financial plan, and only 35 percent have planned for an emergency. If you have decided to take control of your finances, here's a look at what you should look for in a financial planner and how to choose the right one for you.

The Real Deal

A lot of people out there may claim they can help you with your finances, but finding a certified planner is critical if you want to be sure someone is qualified to do so. As such, you should choose a planner who is a Certified Financial Planner, which means they are licensed and regulated and must complete mandatory education to receive certification. You should also look over a potential planner's code of ethics to be sure that your planner is required to keep your best interests in mind. Look for a planner that is a fiduciary, which means that they have pledged to act in your best interests at all times, rather than simply making deals that are suitable to you. If a financial planner isn't a fiduciary, they shouldn't be your financial planner.

Play Detective

It also helps to do a little research on your potential planner. You should always ask a planner what their experience and qualifications are, but don't be afraid to do your own checking into their background. You can find out if a planner has ever been disciplined for unlawful activities or unethical financial decisions by checking in with FINRA, as well as your state insurance and security departments. Beyond that, customer reviews of a planner give you an insight into what it will be like to work with them, and any company worth using will display real reviews from real customers prominently on their website. If there is a lack of customer testimonials attached to a planner's career, ask them point blank if you can speak to one of their other clients about their experiences before you start working together. A financial planner who does their job well will have nothing to hide from you.

Pay Structure

Finding a planner whose pay structure works for you is the final hurdle. In general, commission-based advisors are to be avoided as it is harder to ensure that they are going to have your best interests in mind when they are pursuing a commission. Remember, you are looking for a long-term planner, not a stock market hawk.

Some planners charge one percent of your annual assets, which for those in a steady place might be a good idea. However, people early in their financial growth might find that a percentage-based pay structure creates financial planning that may stop you from liquidating assets such as a home, since those assets determine their pay rate.

For most people, a financial planner who charges by the hour is the best bet. When your needs are simple, an hourly rate ensures you are getting the best service possible in your time with a planner. Many planners who charge hourly are just getting started building a firm, and will be extra attentive to your needs and finances while building relationships with clients like you.