What to Look for in a Certified Financial Planner

Article summary

• Know what to look for: When selecting a CFP, consider their credentials, areas of specialization (such as estate, tax or retirement planning) and fee structure. CFPs must be fee-only when providing financial planning services.
• Ask the right questions: Before committing to a CFP, ask about their fees (typically $200 to $400 per hour), the services they offer, any criminal or disciplinary history, their minimum investable assets requirement and how often they will meet with you.
• Find the right fit: Ask people you know for a personal referral or use the CFP Board of Standards search tool to find qualified candidates and to verify that someone you're considering is accredited by the CFP Board. Taking the time to research and interview potential planners will help ensure you choose someone committed to helping you achieve your financial goals.

It goes without saying that the financial choices you make today will have a significant impact on your own future and that of your loved ones. If you’ve decided that a Certified Financial Planner (CFP) could help you reach your long-term strategic goals, now is the time for an in-depth review of how they work and why one CFP might be a better fit than another when it comes to addressing your unique financial situation.

Factors to consider when selecting a CFP

Regardless of whether you need some basic advice or are looking for more comprehensive financial planning services, you should know the following things about the CFP you choose.

• Credentials. Some planners may have additional credentials—they may be certified public accountants or hold IRS preparer tax identification numbers, for example—that let them assist you in other ways. Visit the Financial Industry Regulatory Authority (FINRA) to review the various financial planning designations, understand their meanings and see the qualifications required for each.
• Area(s) of specialization. Not all CFPs are experts in the same areas of financial planning. Depending on your circumstances, you may want to find a CFP who has greater experience in one or more of the following fields: estate planning, insurance planning, investment planning, tax planning or retirement planning.
• Fee structure. Financial planners can be fee-only, fee-based or both, but CFPs are required to be fee-only when providing financial planning services.
  • Fee-only advisors are paid a flat fee, an hourly rate, a retainer or a percentage of assets under management (AUM). They do not receive commissions for selling products.
  • Fee-based advisors do receive commissions for selling certain products, but those products must not be related to their clients’ financial planning. (For example, some CFPs also sell insurance.)
• Fiduciary commitment. Having a CFP designation is a strong indicator of a fiduciary commitment to act in your best interests, but it's a good idea to ask for:
  • A written fiduciary acknowledgment
  • A clear explanation of compensation (fee-only, fee-based or commission-based)
  • Disclosure of any conflicts of interest

Questions to ask during the interview process

In addition to the above list of factors to consider when selecting a financial planner, there are some specific questions to ask when you first meet with a CFP that will help you find one who is the best fit for your situation.

• What do they charge? You should expect to pay anywhere from $200 to $400 an hour, depending on the planner’s level of experience and the complexity of your situation, or you may pay a flat fee, such as $2,500, for a comprehensive plan.
• What services do they offer? Some professionals will offer a plan that considers all aspects of your financial life, while others may take a more limited focus or even offer a one-time consultation of your current financial situation. They may also sell products like investments and insurance in addition to preparing your financial plan.
• Do they have any criminal or disciplinary history? You should feel comfortable asking about the planner’s history, but free reports on financial advisors’ disciplinary status are also available from the U.S. Securities and Exchange Commission, securities regulators within your state and FINRA.
• Do they have a minimum investable assets requirement? Creating a financial plan can be time-consuming work. Some planners require clients to have a specific amount of investable assets in order to work with them.
• How frequently will they meet with you? It may take several initial sessions to set up your financial plan, but once it’s in place, you will also need regular reviews. These can happen annually, quarterly or more often if a significant life event occurs. Finding out the frequency of those meetings will help you set expectations.

Selecting the right CFP

You have several options when it comes to locating CFPs. You may want to try any or all of the following to find candidates.

• Use the search option of the CFP Board of Standards, Inc.
  • Enter your ZIP code for a list of CFPs near you.
  • Enter a financial advisor's last name to verify they’re a CFP.
• Get a referral from someone you know.

If you’re wondering, “What is a financial planner and why do I need one?”; we have your answer here. Once you’ve answered that question and are ready to find the right CFP for you and your needs, be sure to do your research and ask them questions before agreeing to work with them. A well-chosen CFP will be committed to working in your best interest to help you achieve your financial goals.