How to Find a Financial Planner Who’s Right for You
May 3, 2022
Question: I am new to investing and looking for a financial adviser. Do you have any advice for me?
Answer: Plenty of people go to advisers with little to no experience in investing, but not all advisers work well for those who are newbies to the investing arena. So first up, look for an adviser who gives clear and straightforward answers to any and all questions, says Elliot Dole, certified financial planner at Buckingham Strategic Wealth.
This applies not only to how and why they invest the way they do, but also to how they are compensated and other questions. And don’t neglect the personal connection and whether you like and trust the person, Dole adds. “Personal finance is, you know, personal,” he says.
Inquire, too, about special niches they have, like say working with certain age groups or types of people. And “ask about their process, what you can expect, what it looks like to be their client and how often you’ll speak with them,” says Rick Kahler, certified financial planner at Kahler Financial Group. All of this can help you figure out if the adviser is the right match for you.
Consider a CFP
It sounds like you might want a CFP, or certified financial planner, whose job it is to help you create and maintain a financial plan, advise on investments, prepare for retirement and more. CFPs go through a rigorous certification process and must have a bachelor’s degree, university-level coursework through a CFP Board registered program, a board exam, and either 6,000 hours of professional experience related to financial planning or 4,000 hours of an apprenticeship. What’s more, they’re held to a fiduciary standard: “A fiduciary has a legal obligation to work in your best interest and can’t recommend products or services just because they’ll receive a financial kickback for doing so,” says Benson.
However, understand how much it may cost to go with a CFP. Often they will charge a percentage of your assets under management (1% is common). There are other ways to charge too: The 2020 Kitces Research survey on financial planning found that on average, CFPs charge roughly $1,800 to $2,500 for a comprehensive financial plan, $4,000 for flat-fee service and about $250 per hour for hourly planning. And know that there are cheaper options that may suit you, like a robo-adviser.
Is a robo adviser right for you?
If your financial life is fairly simple, you can probably invest on your own with the help of a robo-adviser. This type of digital platform uses algorithm-driven data along with a bit of human supervision to provide recommendations on how you should invest. This Marketwatch Picks guide highlights some of the top robo-advisers, along with the fees you can expect to pay — spoiler alert: you may be able to pay a fee as low as .15%. Kahler says Vanguard’s personal adviser product is a solid investing vehicle. “It’s low cost, mostly passive and their advisers don’t have an incentive to steer you in a specific direction,” says Kahler.
Get some baseline investing knowledge yourself now
It’s helpful to brush up on your investing knowhow before you even hire an adviser, pros say. Benson recommends learning the basic terminology associated with investing. “Investing can be confusing but understanding the fundamentals, such as which accounts to invest from, the various types of investments available, and how to invest for your personal risk tolerance, is critical to creating a long-term investing habit,” says Alana Benson, investing spokesperson at Nerdwallet. And Rick Kahler, certified financial planner and certified financial therapist FIRM? Recommends the book The Investment Answer by Gordon Murray, which he gives to clients.
And finally, though it can seem intimidating, you may be able to handle your investments.