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Simple Steps to Obtaining a Financial Planner


Ever wonder how a financial planner is different from a stockbroker? Stockbrokers are also seen as market mavens who trade stocks. Planners aren't accountants, either (although some accountants do work as financial planners) — they aren't called upon just to lower your tax bill and they aren't insurance agents who try to sell you complicated life insurance. They're not around only to urge you to buy specific mutual funds either. A financial planner should be familiar with a variety of techniques and tools, including trusts, if they are right for you.

Anyone can hang out a shingle and say that he or she is a planner, but that's not enough — check to see whether he or she has become a certified financial planner, which means that your adviser has passed a rigorous test run by the Certified Financial Planner Board of Standards, which tests on the specifics of personal finance. CFPs need to continue their education on financial matters and ethics to maintain their designation.

The CFP credential is a good sign that the prospective planner will give sound financial advice. Still, even those who pass the exam might come up short on skills and credibility; that's why it's always wise to be meticulous in choosing the right planner.

Financial planners earn their living either from commissions or by charging hourly or flat rates for their services. You might want to avoid financial planners who rely on commissions for their income because you'd rather feel confident that the advice you're receiving is unbiased — if they profit from steering you to particular products, their advice might be muddied.

Fee-based planners don't get a cut from life insurers or fund companies. You might pay them a flat fee — $1,500, for instance — for a financial plan. Otherwise, you could pay an annual fee, often 1 percent of all assets including investment, retirement, college savings and other accounts that they're minding for you.

Some planners cater exclusively to the rich and refuse clients with less than $250,000 to invest. Don't take it personally — hugely successful planners prefer to deal with big accounts and not beginners. This is why you should be looking for a planner who has time to focus on your concerns and is interested in growing with you.

Financial planners can help you remain disciplined about your financial strategies. Procrastination can cause money problems or lead to unrealized potential — it pays to have someone riding you to stay on track.

What does 1 percent of annual assets get you? A buffet of advice about almost anything related to personal finance. You'll feel it's a sensible fee when you see that you're paying to establish a comfortable retirement, save for your child's college or choose the right mortgage when borrowing hundreds of thousands of dollars for a home. However, this asset-under-management approach is generally only available to those with $1 million or more in assets.

Helpful Tips:

  • Go with a CFP. The designation is an instant signal of credibility, but not a guarantee. You can find CFPs at www.letsmakeaplan.org.
  • Ask for recommendations. Ask friends or colleagues who are in a similar situation as you. You want to find a planner with a successful track record advising clients in the same stage of life as you.
  • Check the National Association of Personal Financial Advisors. This is an association of fee-only advisers. www.napfa.org.
  • See the Garrett Planning Network, a group of planners who pledge to make themselves available for smaller projects for an hourly fee. www.garrettplanningnetwork.com.
  • Ask whether the planner is a fiduciary. This means the planner has pledged to act in a client's best interests at all times. If not a fiduciary, planners are held to a lesser standard, the so-called suitability standard. That means that anything they sell you has to be "suitable," not necessarily ideal or in your best interest.
  • Run a background check on your planner. Start with two questions: Have you ever been convicted of a crime? Has any regulatory agency or investment industry group ever put you under investigation, even if you weren't found guilty or responsible? Ask for references from current clients whose goals and finances match yours.


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Katz Nannis + Solomon PC
Katz Nannis + Solomon PC
800 South Street Suite 250
Waltham, MA 02453
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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