How to Find a Financial Planner You Can Trust
Use these steps for researching and interviewing a financial advisor
Whether you’re 25 or 65, a financial advisor can help you navigate life changes and plan for the future. But finding the right one for you and your life situation takes some research. If you’re looking for a new planner, here’s how to get started.
Ask for referrals
A personal recommendation is useful, and thanks to the availability of virtual meetings, if your friend across the country has a great financial planner that you want to consider, that’s no longer off the table. Many planners now work online, notes Jay Zigmont, founder and CEO of Childfree Wealth, which serves adults without children.
Find common ground
Like Zigmont, many advisors specialize in a certain type of customer. For instance, some may limit their client list to high-net-worth individuals or families. Others focus on retirees or entrepreneurs. Choosing a niche helps them develop an expertise, which in turn benefits their clients.
“The key is to find a planner that specializes in people just like you,” says Zigmont, who recommends searching for a planner on XYPN, a database of financial advisors that’s searchable by generation focus, planning need and more.
Other good resources include the Certified Financial Planners (CFP) Board of Standards’ Let’s Make a Plan and the Financial Planning Association’s PlannerSearch.
Ask about compensation
Financial planners charge for their services in one of several ways. Fee-only advisors don’t earn commissions, reducing any conflict of interest. Instead, you pay for their services. Others only take commissions, earned by selling financial products, such as mutual funds, to their clients. Some charge the client and take commissions.
Advisors who follow fiduciary standards are legally bound to act in your best interest.
Advisors who follow fiduciary standards are legally bound to act in your best interest. Jenna Biancavilla, owner of Pearl Capital Management in Phoenix, Arizona, recommends asking advisors if their goal is to benefit the customer every time they handle the portfolio.
Do a background check
Visit the SEC Investment Adviser Public Disclosure website to view an advisor’s ADV (their application for Investment Adviser Registration), which provides information about the advisor’s business, services, fees, disciplinary history and whether they act as a fiduciary. Or request that the advisor offer it. Also, consult BrokerCheck to review any disciplinary actions imposed on the advisor you’re interested in.
Get specific
Treat your initial consultation with a planner like a job interview, Biancavilla says. Ask about their risk-management approach, investment philosophy and disciplinary history. How will you communicate? How often?
“The right advisor will educate and empower you, not confuse or pressure you,” she says. “Take your time, ask direct questions and trust your instincts. Financial planning is about building confidence and clarity, not complexity and commission.”