Just about anyone can call himself or herself a retirement financial planner or
offer financial retirement advice. However, there are numerous criteria and
strategies you can use to evaluate potential candidates.
Get a Referral
You may want to get a referral to a financial advisor from someone who
understands the industry. (Click here
to find prescreened independent financial advisors from NewRetirement.com.)
You might also want to ask your friends, colleagues or family members for a
Review their Qualifications
Some financial advisors are Certified Financial Planners (CFPs). Certified
Financial Planners need to have three years' work experience, a Bachelor's
degree, have passed a two-day exam, and signed an agreement to abide by the CFP
Board's Code of Ethics and Professional Responsibility and Financial Planning
Practice Standards. This designation is offered by the Certified Financial
Planner Board of Standards and also assumes that the planner meets certain
There are other qualifications to look for in a financial planner, although some
excellent planners may not meet every one.
- Many financial planners are also certified public accountants (CPAs), a
national qualification for accounting and tax preparation. It is important to
find out if the CPA also is certified as a Personal Finance Specialist (PFS), a
designation awarded by the American Institute of CPAs.
- There is also the Chartered Financial Consultants (ChFC) certificate that is
awarded to people who have completed a personal finance program offered by The
- Many states require licensing that ensures the financial planners have passed
- If the planner is going to potentially sell you insurance or securities – they
should possess the proper licenses to do so.
Understand Your Needs
Before choosing a financial advisor, you should consider your needs. If you are
interested only in investment advice, you should choose a financial advisor with
specific experience in this area. On the other hand, if you are more interested
in a comprehensive financial retirement plan, an investment broker may not be
the best fit.
The costs charged by financial advisors have been debated and there is no clear
consensus regarding what constitutes a reasonable fee.
At the very least, a financial planner should clearly disclose their fee
structure in advance. Whether you choose a fee only financial planner, a
commission based financial planner or someone compensated by some combination
of these methods, your choice should be based on an assessment of you needs as
Interview Financial Advisor Candidates before Making Final Choice
It is important that you be able to trust and respect the financial advisor you
are working with. In addition to gauging whether or not you will be comfortable
planning your financial life with this person, you should understand how the
Questions to Ask a Financial Advisor
- Understand their investing strategy
- Review a sample financial plan
- Consider their risk profile – how much or little risk do they recommend their clients take
- Inquire about any disciplinary action or complaints they have received
- Request and review information about their qualifications and licenses
- Ask them if they have any real or potential conflicts of interests between their clients and the recommendations they make
- Discuss how the financial planning process works
- Ensure that the advisor carries liability insurance
You should ask for and check references of any financial planner you are
considering hiring. Ideally the profiles of the financial advisor's existing
clients are similar to your own.
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