You can ask for a referral from a trusted adviser or reliable friend, but you should also look for valued credentials, specifically the certified financial planner (CFP) designation. A certified financial planner is one of the most respected financial planning designations in the profession and requires a minimum of three years of experience, adherence to a strict code of ethics that mandates each CFP act as a fiduciary in every relationship, and passing a two-day 10-hour examination.
While a CFP has the education and training to offer a broad range of financial advice, it's important to look for other personal qualities as well, such as independence, transparency, the ability to listen, and overall relationship compatibility.
You should expect a financial planning engagement to include the following six steps:
Establish and define the client-planner relationship. This step must be completed before any financial planning service is provided and requires that you and the planner agree on the scope of the engagement. The planner should work with you to:
Data collection and establishment of financial goals. This step must be completed before any recommendations are made or implemented.
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Process and evaluate your financial status, including wills and trusts. In this step, the planner will evaluate your current financial status and analyze potential scenarios and outcomes. Each analysis should produce detailed reports that identify the strengths and weaknesses of your goals and objectives. Some examples include:
Present financial planning recommendations and alternatives. This would include current position, projections, and recommendations. During this step, the planner develops a financial plan tailored to meet your goals and objectives that aligns with your values, temperament, and risk tolerance. The plan should cover:
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Implement financial planning recommendations. In this step, the planner would assist you in implementing the recommendations and would work closely with other professionals to bring the financial plan to completion.
Monitor the financial planning recommendations. During this step, the planner would periodically review and evaluate the financial planning recommendations in light of changes, such as:
Every successful relationship is built on trust, value, and communication—all of which are paramount when selecting a financial planner. To search for a CFP professional in your area, visit the CFP Board's website.
Dean J. Catino, CFP®, CPRC, is a managing director and cofounder of Monument Wealth Management in Alexandria, VA., a full-service investment and wealth management firm. Monument Wealth Management is backed by LPL Financial, an independent broker-dealer. Securities and financial planning offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. Monument Wealth Management has been featured in several national media sources over the past several years. Follow Dean and Monument Wealth Management on their blog Off The Wall, on Twitter at @MonumentWealth and @DeanJCatino, and on their Facebook page. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for individuals. To determine which investment is appropriate please consult your financial advisor prior to investing.