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How to choose a financial planner who’s right for you

by | Jan 31, 2018 | SELF-PUBLISHED

10 topics to cover during the interview

Increasingly, younger people, especially businesspeople, professionals, and managers, are reaching the stage in their careers where they need the help of a financial planner. But where do you begin? And what kinds of questions do you ask when you interview someone for the very important job of looking after your finances?

Those are good questions, and ones I’ve encountered frequently – mainly because I am a Certified Financial Planner myself. Essentially, a financial planner can help you organize and optimize all aspects of your financial life. This includes everything from getting your budget balanced to saving taxes to helping you set up a long-term retirement savings plan, putting your kids through post-secondary school, and recommending the investments that are best for you – and even managing them if they are registered as portfolio managers.

Here’s a list of topics to cover with a prospective planner. It’ll help give you a better idea of where this particular advisor’s focus and interests are and whether they’ll make the right fit for you.

  1. Qualifications. Ask about training and continuing education, designations, and professional credentials. Organizations such as the Financial Planning Standards Council and Chartered Professional Accountants (CPA) grant standing to those who have successfully completed a standardized and rigorous program of study and can provide a diploma and listing as a member in good standing of the professional organization as proof of having done so.
  2. Experience. Determine how long the planner has been practicing, with what firms, and whether the planner has specialized training, such as investment management or financial analysis.
  3. Services. Financial planners may offer a variety of services depending on their qualifications, regulatory registrations, and employer (if not an independent planner). For example, some planners can help with setting up a comprehensive plan but may have decided to outsource financial product sales or investment management to affiliated firms.
  4. Planning philosophy. Some planners offer a comprehensive planning service encompassing a client’s entire financial picture, including setting up a plan and executing an investment portfolio. Others may concentrate only on selling mutual fund or insurance products, or may be “captive” to a single supplier of such products and unwilling to offer products from competitors.
  5. Network. Financial planners frequently work with other experts in their organization or at affiliated firms or professional offices, including those you already consult, such as lawyers and accountants. Even the best planners can’t do everything, but they can effectively control your plan and make sure all the parts are integrated for maximum efficiency.
  6. Method of payment. Your planner should disclose in writing how they’ll be paid for their services. The three most common methods of payment are 1) cost of service, where the planner is compensated by the provider of the product they sell, such as embedded fees in mutual funds, 2) percentage of assets under management, 3) fee-for-service, based on an hourly rate or a menu of services.
  7. Fees. Your prospective planner should give you an estimate of costs based on the work they’ll be doing for you. Ask them to break out the estimate in terms of the fee structure shown in Number 6 above.
  8. Conflict of interest. Does anyone else benefit from the planner’s recommendations or products offered for sale? It’s sometimes difficult to do, but it’s essential to determine whether the planner puts anyone else’s interests ahead of yours. Those planners holding a CFP designation must annually attest to a code of ethics that clearly states your interests will always come first.
  9. Regulatory compliance. Financial planners who sell products such as securities or insurance must be registered with provincial regulatory agencies or industry regulatory bodies, such as the Ontario Securities Commission, the Mutual Fund Dealers Association, or the Financial Services Commission of Ontario. In addition, holders of professional credentials are members of professional bodies that govern their fields and must adhere to a code of ethics.
  10. Written agreement. It almost goes without saying, but the planner should provide a written agreement of the services to be provided. This provides a legal document for both you and the advisor that spells out precisely what services you’ll be getting, and for how much. It’s particularly important in cases where the planner is also a registered portfolio manager and may be managing your funds on a discretionary basis.

© 2018 by Robyn K. Thompson. All rights reserved. Reproduction without permission is prohibited. This article is for information only and is not intended as personal investment or financial advice.

© 2023 by Robyn K. Thompson. All rights reserved. Reproduction without permission is prohibited. This article is for information only and is not intended as personal investment or financial advice.

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