Choosing the Right Financial Planner

As we continue to work our way out of the Great Recession of 2008, more and more people are realizing that they need financial advice but are often unsure of where to turn for that advice.  Financial planning can be helpful for everyone, regardless of your income or your experience handling money.  Deciding on whom to hire is a key decision, akin to choosing a physician, accountant or attorney. Since you don’t want to make this decision more than once, you want to make your choice very carefully.  Here are the criteria I recommend you use:


  • Credentials. Your search should begin with advisors who are Certified Financial Planner™ certificants.  To become a Certified Financial Planner™ (CFP®) certificant, the advisor must pass a rigorous national exam, complete 3 years of ‘relevant’ experience, agree to abide by a strict code of ethics and maintain 30 hours of continuing education over rolling two-year periods.
  • Experience. I strongly recommend that you choose a CFP® who has a minimum of 5 years experience in the financial planning field.  Ten years or more is even better.  There is an old saying, “There is no substitute for experience,” and in the world of personal finance and investing, this is a very true statement.
  • Compensation. There is no ‘right or wrong’ method of compensation but you must know how your financial planner is being paid so that you can review his or her recommendations in the proper perspective.  While it might feel awkward, you should ask every potential advisor all the ways he or she is potentially compensated when providing you financial advice or investment management services.  Here is a summary of compensation methods:
  • Chemistry.Ideally, when you choose a professional advisor, you will be selecting someone with whom you will work with for the rest of your life. However, it is not unusual to find a competent advisor that for some reason you do not “click” with. Call it a difference of personality. Most professional advisors will meet with you initially without charge. This first meeting is used to determine the scope of the work to be performed and how the planner is compensated along with an estimate of the dollar amounts of that compensation. You should also use this first meeting as an opportunity to determine if the advisor is someone you feel you would be happy working with long-term.
  1. Fee-only.  A fee-only financial planner receives fees directly from the client and never receives commissions from the sale of products.  Under CFP® Board of Standards rules, a certificant is prohibited from referring to his/her compensation as “fee-only” if either the certificant or a related party in the certificant’s business model (i.e. his or her employer) receives a commission or a referral fee.
  2. Commission only.  Here the financial planner does not charge a fee for the planning work, but  receives commissions from the sale of products recommended as a result of the planning work.  If a product is recommended, ask what both the total commission is and how much the advisor will receive of the total.
  3. Fee plus commission.  Many financial planners charge a fee for developing your financial plan and then receive commissions if you buy products that they recommend.  Again, you’ll want to ask the amount of commissions paid.
  4. Fee off-set.  It’s rarer, but some planners charge a fee for the planning work and then reduce that fee based on any commissions received from product sales.


Under CFP Board of Standards rules, all CFP® certificants have a fiduciary duty to place your interests ahead of their own interests.


To find a CFP® certificant near you, visit