- Step 1: Find someone certified Find a certified financial planner by contacting the Certified Financial Planner Board of Standards ("cfp.net":http://cfp.net). They will provide you with a list of CFPs in your area. Already have the name of someone? Look them up on the site to see if any disciplinary action taken has been taken against them.
- TIP: Get a free financial planning resource kit from the CFP board by contacting them at 800-487-1497 or mail@CFPBoard.org.
- Step 2: Get someone who specializes Focus your search on planners who specialize in clients like you. If you're a young person plotting your financial future, you don't want a broker who mainly manages retirees' money.
- Step 3: Avoid novices Make sure the candidates have at least five years experience.
- Step 4: Check them out Check out your potential planners by contacting the Financial Industry Regulatory Authority ("finra.org":http://finra.org). By searching their name, you can see if previous clients ever registered a complaint about them. You can also verify their credentials through your state's Department of Securities.
- TIP: Consider doing a criminal background check; convicted felons are allowed to have securities licenses. Many online companies provide this service for a modest fee.
- Step 5: Set up interviews Narrow your choices to a few planners and call for an appointment; most will meet with you for a free 30-minute introductory session.
- Step 6: Investigate fees Before meeting, find out how they bill. "Fee-only" planners charge a rate for their services, so there's no incentive for them to sell you more than you need. Other planners collect commissions based on what they sell you, so you only pay for the advice you act on. Avoid "fee-based" planners, who charge a fee and take commissions.
- TIP: The National Association of Personal Financial Advisors ("napfa.org":http://napfa.org) and the Garrett Planning Network ("garrettplanningnetwork.com":http://garrettplanningnetwork.com) both provide a directory of fee-only planners. Just make sure the planner is also certified!
- Step 7: Ask about access At your fact-finding meeting, ask how many times the planner foresees the two of you meeting to discuss your finances, and whether those meetings will be in person.
- Step 8: Look for red flags Beware of an adviser who has pat advice to offer before you've finished explaining your financial situation and goals. And stay clear of someone who acts like they're doing you a favor by taking you on.
- Step 9: Go with your gut All things being equal, go with your gut. You want an adviser with whom you are comfortable.
- FACT: When former baseball great Lenny Dykstra found out that his $1.7 million had dwindled to $400,000 in 2002, he fired his financial adviser and began studying investment strategies himself. He eventually turned that $400,000 into $5 million.
You Will Need
- Background checks