How to Choose a Certified Financial Planner (CFP)

All planners are not created equal, despite what their profession as a whole may claim. CFPs come in all shapes and sizes and have varied levels of experience and education. We recommend that you interview at least three planners before you choose. Get yourself prepared before you interview the planners. Let them know the areas you feel you need the most help in and the areas you think you have already covered well.

You may be able to find some information about the CFP—for instance, their work experience and education—before the interview by visiting their Web site or doing an online search on the candidate. This will help you keep your interview more focused. Here is a list of questions and things to consider when choosing a CFP:

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Questions to Ask a CFP During Your Interview Notes

1. Experience

How long have you been in this line of work?

Ideally, you want someone with eight to ten years of experience.

 

2. Expertise

What are your areas of expertise?

You want to know their areas of expertise or specialization. Is it income tax planning, retirement planning, or something else?

 

3. Qualifications

What is your professional designation?

Find out if they have a CFP designation or other professional designations such as a CPA or JD?

 

4. Location

Where are you located geographically?

We think it's important to have a face-to-face meetings within a reasonable distance of your work or home.

 

5. Pricing

How are you paid for services and what are your typical charges?

You can expect comprehensive plans to cost you somewhere between $750 and $2,500 (and much higher if your situation is complex). You should look for fee-based financial planners. If you can, also find out what their main source of revenue is. For example, is it completing financial plans, selling products, or managing assets? The answer to this will help you probe more deeply and possibly uncover any conflicts of interest. Get a written estimate before work begins and have him or her outline the scope of the engagement.

 

6. Services Provided

What is your role in implementing a plan you would put together for me?

Here are some possibilities:

  • Provide a Plan only and no implementation
  • Provide a Plan and referrals for implementation
  • Provide a Plan and implement all action items
  • Manage your assets

You need to determine how comfortable you are having the planner implementing items—would you rather keep implementation and planning separate, or do you like the convenience of having a one-stop shop, even though that could mean having some conflict of interest?

 

7. Conflicts of Interest

Do you have licenses to sell certain financial products, such as life insurance or securities?

Find out if they're compensated for selling these products and, if so, how. You need to be confident that your planner is focused on your needs—not on selling products.

 

8. Client Base

What types of clients do you serve, and are there any minimum net worth or income requirements?

You'll want to know if they work with entrepreneurs, schoolteachers, or corporate executives, for example, because each profession has unique planning requirements. The planner who will be most beneficial to you is one who works with people with similar profiles to yours.

 

9. Referrals

Will you provide me with the names and numbers of clients who I can call for a reference?

Get those names, and then call them before hiring any CFP.

 

10. Gut Check

Make your own assessment. Does the person seem forthright in his or her answers? Make sure you have a sense of trust and rapport with the person. You want to feel confident that they're listening to what your needs are and that they'll be able to provide you with solutions.

 

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