How to Choose a Financial Planner

Working with a financial planner can be the key to achieving your goals and building a prosperous future. Professional guidance helps you make sound choices during significant life moments, from retirement to building an investment portfolio. 

To choose a reputable financial planner, it’s essential to understand their services and how they operate. In this article, you’ll explore how to select a financial planner for transparent advice. 

What Is a Financial Planner?

A financial planner helps you manage your money to reach your life goals. They focus on your finances as a whole rather than advising on individual elements, such as investments. Typically, your financial planner:

• Assesses financial health: From your salary to monthly expenses, insurance, and investments, a financial planner assesses your finances as a whole. They ask about your future financial goals and what you hope to achieve. 
• Creates long-term strategies: Keeping your goals in mind, your financial planner develops a plan to help you reach them. Whether you want to buy property or save for retirement, they build a roadmap that outlines how you’ll get there. 
• Offers valuable financial guidance: Because financial planners can advise on multiple areas, including estate and tax planning, you’ll receive recommendations to achieve the most financial stability. They’ll warn of potential risks that may affect your financial goals. 
• Provides continuing financial help: A significant benefit of a financial planner is that they can provide ongoing advice. Financial planning is especially helpful during periods of job changes or tweaking your investment strategies. 

Financial Planner vs. Financial Advisor

While they may sound similar, you should be aware of the differences between financial planners and advisors. The term “financial advisor” is broad, encompassing various professionals such as stockbrokers or investment managers who focus on specific financial services. 

A financial planner offers an in-depth analysis of your financial situation and examines the bigger picture. Whereas an advisor may manage a particular investment or asset, they offer a comprehensive strategy across your financial landscape. 

What to Look for in a Financial Planner

A lack of regulations means anyone with some knowledge of finances can call themselves a financial planner. Before hiring a financial planner, researching key details is essential to ensure you receive valuable advice. Here’s what to consider when choosing a financial planner: 

• Fiduciary standard: An essential element of a qualified financial planner is to check for a fiduciary standard. The fiduciary standard is a legal requirement for planners to advise in your best interest. Fiduciary contrasts the suitability standard, a rule that only requires recommending suitable options, and not necessarily the best options. 
• RIA status: Some planners will also acquire the Registered Investment Advisor (RIA) status. If you’re inquiring about investment advice, the RIA status ensures you receive guidance under the fiduciary standard. It’s an advisor’s or planner’s responsibility to offer constructive advice and highlight potential conflicts of interest. 
• CERTIFIED FINANCIAL PLANNER™: Financial planners with a CERTIFIED FINANCIAL PLANNER™ certification indicate a highly capable and knowledgeable professional. Specific requirements to achieve this certification include passing an exam, completing additional educational materials, and gaining experience in a professional setting. 
• Fee-only service: Your research will likely bring results for fee-only and fee-based advice. A fee-based planner charges for financial advice but also earns commissions for selling specific products. For transparent guidance without a conflict of interest, choose a fee-only planner for your financial needs. A fee-only approach may be a fee-for-service, such as a flat fee, a subscription fee, or an hourly rate, or an asset-based fee, such as an assets-under-management (AUM) percentage arrangement.

When Is the Right Time to Hire a Financial Planner?

Many believe a financial planner is only for those with a large sum of money. However, you don’t need a lump-sum cash payment to get valuable financial advice. Financial planners have the knowledge and skills to offer personalized advice, no matter how much money you have in the bank. 

Whether you’re planning on buying a new property or tying the knot, a financial planner helps analyze your goals and sets a plan to achieve them. Additionally, financial planners can help with more complex financial planning, such as listing your business for sale or inheritance. 

9 Questions to Ask Your Financial Planner

Before you select a financial planner, ask these questions during your consultation:

1. Does the firm follow the fiduciary standard? Ensuring your financial planners follow the fiduciary standard means they advise you in your best interests, rather than recommending “suitable” services and products. 
2. How would your financial planner describe their typical client? You may find it helpful to ask about a financial planner’s typical client base. Some planners specialize in advising specific demographics, including homeowners and retirees. 
3. Are your financial planner’s services fee-only? Double-check that the firms you approach offer a fee-only structure to help with your finances.
4. What certifications does your financial planner have? You’ll likely be in safe hands if your financial planner has strong qualifications, including a CERTIFIED FINANCIAL PLANNER™ certification.
5. What is the firm’s fee structure? Ensure you’re comfortable with a financial planner’s fee structure, such as whether they charge a flat fee or an hourly rate. 
6. Can you and your planner continue a long-term advisory relationship? You’ll gain financial knowledge by continuing a relationship with your financial planner. Discuss the possibility of extending your relationship beyond initial discussions. 
7. Will you speak with multiple financial planners? If you prefer to work with a single planner rather than multiple planners from the same firm, be sure to specify this. Creating a one-on-one relationship helps to build trust and set expectations. 
8. Does your financial planner update your plan periodically? Particularly if you’re able to form a long-term relationship, inquire about whether your financial planner consults or updates your plan periodically. Updates may be preferable to accommodate market changes or adjust to potential lifestyle changes, such as retirement. 
9. Are there restrictions on your financial planner’s services? Although financial planners offer broad advice, some may specialize in certain subjects, such as pensions or investments. Ask your financial planner about specialty areas and how they can help. 

Secure Your Fee-Only Financial Planner Today

By learning how to pick a financial planner, you’ll gain insight by partnering with our experienced fee-only team at HSC Wealth Advisors. Our Virginia-based advisors offer a client-first approach to meet your requirements, whether you need retirement planning or investment management advice.

With decades of experience, our planners are committed to providing valuable strategies to help you work toward your financial goals. If you’re looking for financial planners in the Lynchburg area, HSC Wealth Advisors offers peace of mind and transparency.

Got any questions? Contact the team today to discuss how financial planning can benefit you.