How to Find a Financial Planner

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A very good article. I wrote a similar article http://www.humblesavers.com/2012/financial-planner-checklist-8-questions-you-must-ask/ and it includes a one page checklist that can be downloaded free of charge. Hopefully it can be of use. cheers

Colin Williams 7:34AM May 07, 2012

Information was helpful. I printed it out and good grief. I needed a magnifying glass to read it. Keep in mind people asking this question are sometimes in their golden years and would appreciate a larger font.

Gloria Towry of OK 2:09PM October 13, 2011

Most financial advisors are just salesmen, and most financial advice is just plain terrible. You can be a fiduciary, have a degree, etc and if you're not that bright, you just won't deliver much to your clients.
I've migrated a lot of wealthy $2 million+ portfolios over to my firm, and only one thing is clear: intelligent people mostly choose financial advisors through a "best of the worst" process. Even the wealthy rarely choose advisors whose intelligence they deeply respect.
If you intend to take seriously the process of doubling and re-doubling your wealth, you need to plan on doing some thinking.
First, you need your own investment philosophy. This doesn't mean "trust your advisor." You need to learn enough about the capital markets to choose an advisor whose philosophy respects and complements your own. A good advisor will start by helping you develop and refine your philosophy, even before you work with them.
Here's mine: “Capitalism works. Portfolio structure, not stock-picking, dictates performance. Take only the risk you can handle, use science to construct your portfolio, ignore anyone paid to predict the future, and stick with your plan: you will sleep sounder and wake wealthier.”
I put investor education first with my clients, because I've found that intelligent, educated investors become wealthier, whereas investors who hope to be completely hands-off end up hopping from strategy to strategy, never making any real money in the markets.
Second, you need to take your time finding someone. Really develop a sense of the quality of their thinking. In my practice, I demonstrate this partly through conversation, and partly through my weblog: www.rossasset.com/weblog/
The job of a financial advisor is to help you become a better capitalist. If you expect to eat what the markets deliver, then take your time, think a lot, develop your investment philosophy, and find an advisor you respect who can help you become a more successful capitalist.

Brendan Ross of CA 6:52PM June 08, 2011

My husband and I were looking to plan our retirement and are in need of a financial planner that we can trust. This website really made it clear that I need to find someone that we can TRUST. Ive been looking at other sites and found one that answered a lot of my questions that I didn't even know I had. I hope it can help you all do the same: http://wealthguards1.wordpress.com/

Heather of CT 10:16PM May 19, 2011

Mr. Smith,
I am an Investment Advisor Representative of Endress Capital Management, my own Registered Investment Advisory Firm. I saw your post and would like to respond. First, let me say I share your view of the deplorable lack of accountability among financial professionals.
However, your wish to have financial advisors held directly responsible for client losses is illegal. Brokers and/or advisors may not reimburse clients for investment losses. Furthermore, neither brokers nor advisors cannot charge performance fees to the average client. Hedge funds more often charge these kinds of fees, but there are still limitations on who they may charge these fees to. Some of the standards are a person with worth of over $1 million or a person who has made $200,000 the last two years and expects to make that in the future. I know because I have started a hedge fund. No one had any clue about what it actually was but the simple fact they heard stories on the news caused them to immediately judge it is "bad."
In addition, I would advise you that going with any advisor who works on commissions presents a clear conflict of interest. Such an advisor usually has an incentive to trade more than is necessary or put your money in high-cost funds or investment products (i.e. annuities); both strategies have the potential to cost you a fantastic amount of money.
A fee-only advisor has no such concerns. Furthermore, a Registered Investment Advisory Firm is held to a higher legal standard, the fiduciary standard as opposed to the suitability standard brokers must adhere to. The SEC conducted a study under the Dodd-Frank Act which recommended all financial professionals be held to a fiduciary standard but brokerage firms are fighting this and the outcome is uncertain.
In short, as an Independent Advisor who has fought tooth and nail to learn about the issues and start his own firm to do investments the right way, I find it somewhat frustrating that prospective clients are so easily persuaded to go with a brokerage firm to invest. Such firms even have to state they do not have to act in your interest in their account statements, yet no one is seemingly willing to read a short document when their entire savings balance is at stake.
Please see my website (http://www.endresscapital.com) to read more about the differences between Investment Advisors and Broker-Dealers.

M. Endress of IN 2:50PM April 21, 2011

If you are going to advise people on their retirement, you better damn well know what you are doing, and I don't mean how to maximize your commissions. If things go badly, other "professionals" have to be responsible for their actions. Lawyers get disbarred, doctors and CPAs lose their licenses and get their butts sued off. But a financial adviser, they go on vacation. I know one "financial adviser", a very successful guy, that spent 3 months in a rented villa in the south of France last year, right now he is on vacation in New Zealand. So, while his past customers struggle to find a way to fund their retirement after losing so much in "investments" this guy is living the high life off his commissions. Personally, I've had a number of financial advisers over the years, all highly recommended, great credentials, etc, etc. I did my homework on them all but in the end, not one of them did what they said they would do. I don’t begrudge them making a good living, but it should be as a consequence of their good performance for their customers, not at the customer’s expense. Advising on a person’s retirement should be a huge responsibility, losses should not excused with lame statements like: “Well I never guaranteed a positive return” or “it’s gone because of an unanticipated advertise yield curve”. Perhaps financial advisor fees and commissions should be tied to performance, if they earn profits for their customers, they make substantial dollars, if they lose money for their customers, they make no fees or commissions and maybe even have to reimburse the customer for the lose. That seems equitable to me.

B. Smith of CA 12:33PM March 26, 2011

There are a number of directory services, like How Advisors Help (http://howadvisorshelp.com) which help connect individuals to trusted, financial advisors.

Rick of WA 1:26AM February 23, 2011

As an independent financial advisor who began her career in a bank and then a wirehouse, I know the game of perception. This article uses two out of six points to emphasize "credentials". I agree and disagree. I have two masters degrees and one designation (CRPS), furthermore, I plan to earn a CFP, but only for the sake of perception. The reason I write this is because earning a CFP will not teach me anything new - working with a partner who has 35 years experience in this business (a person who built an independent firm from scratch) taught me more than any textbook or course ever could. The perception of certain designations, and the power (lobbying funds) of certain organizations to push their designations as being the most "credible" is what drives this. All of my clients come from referrals. The degrees and designations do count for something and illustrate one's dedication, but technically, a criminal could still earn these and not do the right thing for the client. Go with an independent advisor and go with your gut.

J.R. of VA 11:30PM December 08, 2010

As this article mentions, do your homework. It can be time consuming, but (i) dig up referrals from your friends and personal network, (ii) research the prospective professionals online by simply typing their name in Google and make sure to check out their credentials from the appropriate licensing group or government organization, and (iii) ask a lot of questions about experience, education, philosophy - and conduct additional reference checks if needed. You can find out a lot about people on the Internet now and a great new site to find out information about financial advisors and planners is Wealth Visor (www.wealthvisor.com). The financial planning association also has a good sit to check out, but it is specific to CFP's and Wealth Visor also covers brokers, which some people prefer.

Someone who has done their homework of OR 7:05PM September 16, 2010

I know what you are saying when you say "work in our best interest." That is always the number one thing to look for in an advisor.
One of the key elements of the analysis and assessment process of advisory practices is determining the average client portfolio size.
This analysis benefits both investors and advisory practices by creating a win-win scenario: Investors desire to have the best quality advice and service by becoming one of their advisor's top tier clients.
Most advisors dedicate their time and attention to their largest relationships, adhering to the 80/20 rule (80% of revenues are generated by the top 20% of clients). Just something to keep in mind when you are interviewing.
I did hear that in Washington, Seattle Business Magazine is publishing a list of the top QUALITY advisory practices in June of 2010 as determined by NABCAP www.nabcap.org (a nonprofit aimed at helping the investor when it comes to finding an advisor or practice).
They take the approach of how well the advisor or practice can service the true needs of their clients. And they look at avg. assets per client, credentials, # of clients per advisor, etc. so they look at stuff that all determine how well the advisor is client-focused. NABCAP www.nabcap.org has it right on. This is the kind of stuff you need to look for to determine if the advisor is a true professional or just another salesman.
Joe Schmo

Joe Schmo of CO 1:13PM February 17, 2010