Most people can benefit from professional financial advice, whether they are just starting out or are getting ready to draw on their retirement savings. But recognizing you need help is just the first step: You must also find and vet an adviser who is appropriate for your needs.
[RELATED (READ THIS FIRST): The Basics on Finding Professional Planning Help]
What to Look for
First and foremost, you want an adviser who adheres to a fiduciary standard. This means they are legally bound to act in your best interests and must put your interests before their own. This type of adviser is also fee-only – you pay them either via a set fee or a fee that’s calculated as a percentage of your assets.
Be wary of the “free” adviser a financial company may provide. They are often more interested in sales than anything else, because they likely receive a commission. They may be following a suitability standard rather than a fiduciary standard, meaning that they are only obligated to make sure investments are appropriate for you, not that those investments are your best options.
What’s in a Name?
A person’s credentials can tell you something about them, but not necessarily the whole story. The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) do not endorse any particular financial professional titles; a financial professional may use various titles regardless of whether they’re registered with either group.
Some titles are granted by private organizations, some can be purchased, and others are just made up. You cannot rely on an impressive title to determine whether a financial professional has the expertise you need.
However, certain credentials are awarded only after individuals complete rigorous education and experience requirements. These individuals are also held to ethical standards and have continuing education obligations.
The three credentials that I am the most familiar with (and full disclosure, I hold two of them) are Certified Financial Planner® (CFP®), Chartered Financial Consultant® (ChFC®), and Accredited Financial Counselor® (AFC®). Those aren’t the only trustworthy credentials out there: You can check out others on FINRA’s professional designations page. While FINRA doesn’t endorse any credentials, the agency provides detailed information on each one, including educational requirements and issuing organizations.
Where to Find a Financial Professional
Unsure where to start your search? These sites are the best way to look up independent financial professionals:
- National Association of Personal Financial Advisors
- Garrett Planning Network
- Military Financial Advisors Association
- XY Planning Network
You can also ask friends, family, and colleagues for their recommendations, but not everyone knows the differences between the types of advisers. Your co-worker may tell you about his great “financial guy” without realizing that person works on a commission basis.
[RELATED: MOAA's Financial Calculators]
Ask the Right Questions
You should plan on interviewing at least two or three different professionals to make sure their planning style and outlook fit your needs. Some good questions to ask include:
- What is your fee structure? Ideally this is going to be a flat fee, an hourly fee, or a percentage of assets under management, not a commission.
- Are you a fiduciary? The answer to this, as I explained above, should be “yes!”
- What are your credentials? Credentials won’t tell the whole story, as noted earlier, but you want to make sure your potential adviser has the skill and experience to take care of your finances.
- How will our relationship work? You will want to know how often you’ll meet, and whether your potential adviser will be available via email or phone if you have questions.
- What is your investment philosophy? It’s OK if you don’t understand the finer points of investing; after all, you’re hiring a professional for their expertise. But your potential financial planner should be able to explain their style of investing, and it should mesh with your goals and your risk comfort level.
Before you sign any sort of agreement with a financial professional, educate yourself a bit on investing and fraud. The SEC has an entire website devoted to investor education, and you can also use their search engine to find out whether an adviser is licensed and registered.
Accredited financial professionals serving in family readiness centers on military installations also may offer assistance to military retirees, but not all will have bandwidth, especially during tax season. Not sure how to find them? Check the installation’s website for guidance, or visit Military OneSource’s online directory.