Questions to ask a Financial Planner

Working with a financial planner or investment advisor can be an excellent way to ensure your are making sound financial decisions and planning well for your future. A good financial planner can help you calculate risks and rewards in different areas of your financial life–whether that means saving up to buy a house, investing your money wisely, or ensuring your loved ones are well provided for in the case of an emergency. However, not all financial planners are created equal–while many states require financial advisors to have specialized training or licenses, not all do.
Asking the following questions before you select a financial planner will help to ensure that you have a qualified professional, ready to meet your planning needs.

1. What are your qualifications?
Many people offering financial services call themselves financial planners. However, financial planning is a detailed, comprehensive process. It requires hands-on experience and a strong technical understanding of topics such as personal tax planning, insurance, investments, retirement planning and estate planning – and how a recommendation in one area can affect the others.
Ask your financial planner whether she holds any professional credentials–including the Certified Financial Planner designation, or CFP, which is recognized internationally as the mark of the competent, ethical, professional financial planner.
Beyond that, ask what training she has successfully completed, whether she holds any kind of specialty, and what steps she takes to keep up with changes and developments in the financial planning field.

2. What experience do you have?
Experience is an important consideration in choosing any professional. Inquire about what experience the planner has in dealing with people in similar situations to yours and whether he has any specialized training. Ask how long the planner has been in practice, the number and types of firms with which he has been associated, and how his work experience relates to his current practice. Choose a financial planner who has at least two years experience counseling individuals on their financial needs.

3. What services do you offer?
The services a financial planner offers will depend on her credentials, registration, areas of expertise and the organization for which she works. Some planners offer financial planning advice on a range of topics but do not sell financial products such as insurance, stocks, bonds, and mutual funds. Others may provide advice only in specific areas such as estate planning or taxation.
If you are looking to hire a financial planner who does offer financial products or gives investment advice, be sure they are registered with provincial regulatory authorities and have specialized designations in these areas of expertise.

4. What is your approach to financial planning?
The types of services a financial planner will provide vary from organization to organization. Some planners prefer to develop detailed financial plans encompassing all of a client’s financial goals. Others choose to work in specific areas such as taxation, estate planning, insurance and investments. Others may only deal with clients with specific net worth and income levels, or will outline a plan, and refer you to other financial professionals to implement it.
While it is not necessary to go into your first meeting with a financial planner knowing exactly the scope of the services you want, this question will help you determine what level of involvement you would like the financial planner to have.

5. Will you be the only person working with me?
It is quite common for a financial planner to work with others in his organization to develop and implement financial planning recommendations. You may want to meet everyone who will be working with you. In addition, financial planners often work with other professionals, including ones you already use such as your lawyer and accountant.

6. How will I pay for your services?
Your planner should disclose in writing how she will be paid for the services she will provide. Planners can be paid in several ways:
Commissions: The planner is compensated if you purchase financial products to implement a financial planning recommendation. In some cases, the commission is paid by the suppliers of financial products such as an insurance company. In other cases, you pay the commission, for example, if you buy shares of a publicly traded company. Commissions are usually a percentage of the amount you invest in a product.
Fee-for-service: Planners paid on a fee-for-service basis may charge an hourly rate, set a flat rate for a specific service or be paid a fee based on a percentage of assets or income. In some cases, compensation would be a mix of fee and commission. You should also ask if the planner or organization receives any benefit other than commission, such as advertising and promotion subsidies, from suppliers of financial products.

7. How much do you typically charge?
While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs would include the planner’s hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

8. Could anyone besides me benefit from your recommendations?
Ask the planner to provide you with a description of her conflicts of interest in writing, for instance, any business relationship with the companies or ownership interest in any company that supplies financial products sold by the planner and the planner’s employer.

9. Are you regulated by any organization?
Financial planners who sell financial products such as securities and insurance or who provide investment advice are regulated by provincial regulatory authorities and may also subscribe to a code of ethics through a professional association. Others who are members of the accounting and legal professions are usually members of professional bodies that govern their fields. Planners who hold the CFP designation are subject to disciplinary proceedings of Financial Planners Standards Council.
You should also ask if he has ever been the subject of disciplinary action by any regulatory body or industry association, and verify the answer by contacting the relevant organization. Ask the financial planner whether he subscribes to a professional code of ethics such as the Certified Financial Planner Code of Ethics.

10. Can I have it in writing?
Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference

* Excerpted from
Certified Financial Planners Board of Standards, Inc.

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