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6 Questions You Should Be Asking When Hiring a New Financial Planner Thumbnail

6 Questions You Should Be Asking When Hiring a New Financial Planner

About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual Fiduciary Financial Planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals. 

Understanding the Value of a Financial Planner

The role of a Financial Planner is to help you and your family determine the strength of your current financial position, explore what's possible, and work collaboratively with you to help you meet your long-term financial goals. Most of my clients have never worked with a Financial Planner before, so I understand why working with one can be intimidating. Most Financial Advisors have one meeting with a potential client, then ask them to share all their personal financial information, hand over their entire life savings, completely trust them, and everything will be ok in 20-30 years when you retire. 

I understand this is a ridiculous proposition. That's why I offer any potential client two separate Complimentary Consultations before they have to make the financial investment of becoming a client. Then I take my time addressing my clients' most important issues one by one at their pace.  I take time to earn their trust and often devote 25+ hours to my clients in year one of a Comprehensive Financial Planning relationship. In addition, Dream Financial Planning doesn't have an asset minimum to become a  client.

I also give them an invitation to Right Capitalthe interactive Financial Planning Software I use for clients. I ask them to enter some basic information before our 2nd meeting, so we can walk through the software together to demonstrate the value of working with a Financial Planner. I think it's important for clients and financial professionals to understand that Financial Planning is an ongoing process and not a product to be sold to generate commissions. To give you an idea of a few of the issues I cover with clients I've included a PDF below with helpful tips you should consider before the end of the year.

What Issues Should I Consider Before The End Of The Year

Does a Financial Planner Make Sense for me?

As a CERTIFIED FINANCIAL PLANNER™, I think everyone should work with a Financial Planner. However, I admit I might be a little biased. I recently spoke with U.S. News for their article, Should I Get A Financial Advisor? I discuss the benefits of avoiding emotional decision-making. There are some great tips in the article that highlight when working with a Financial Planner might make sense for you.  One of the key points, illustrated in the image below, in the article is that we're more than just stock pickers.

Because a planner acts as a professional advisor, they are often seen as filling in a gray area between the tax accountant and a traditional stockbroker. However, some Financial Planners are also bridging the gap between CPAs and Portfolio Managers by offering Investment Management, tax solutions, and full-service financial planning. I know all the different titles to describe finance professionals can be confusing, but I use Financial Planner and Financial Advisor interchangeably.

                                                                      Image Source: Kitces.com

That said, there are ways to make sure a planner is qualified to do the work needed for proper asset and wealth management. Here are seven questions that you should be asking when hiring a new Financial Planner. 

Question #1: Are You A Fee-Only Fiduciary?

Are you a Fee-Only Fiduciary all the time? I actually heard another Financial Advisor tell someone that not acting as a Fiduciary all the time was a benefit to their clients. I couldn't believe my ears. Could you imagine going to your significant other and telling them you're only going to be in a part-time relationship? Yeah, me either. 

Transparency is important. Make sure your planner explains the fees clearly so you have a solid understanding of what you’re expected to pay and the services you will receive. If you are going to be working with a Fee-Only Financial Planner, they will be incentivized to provide advice and service that is in line with your goals. 

When it comes to planning for your future, a strong Financial Planner is an important part of this process. Hiring a trustworthy Financial Planner is something to take seriously. Asking yourself these questions is an important step towards hiring the right person for you and your family.

Question #2: How Long Have You Been Practicing?

While most planners are qualified, finding someone you trust with your savings and the future of your financial path is incredibly important. Everyone needs to get a start somewhere, but finding someone with experience is key. It may be helpful to know that for an advisor to be eligible for a CERTIFIED FINANCIAL PLANNER™ (CFP®) designation, they need to have at least three years of experience.1 In case your wondering, I've been a licensed Investment Advisor for over 15 years.  

Question #3: What Are Your Credentials?

Choose a Financial Planner with the appropriate professional qualifications to meet your needs, such as the CFP® credential. To become a CFP®, the planner must pass testing that demonstrates they meet regulated educational requirements and professional standards. Please read the blog below for more information about what it takes to become a CERTIFIED FINANCIAL PLANNER™ (CFP®).

"You’re a CFP® professional, Great what’s a CFP®?”

CERTIFIED FINANCIAL PLANNER™ Professional these are the major topic areas that the certification covers.

  • General Principles of Financial Planning
  • Insurance Planning 
  • Investment Planning
  • Income Tax Planning
  • Retirement Planning
  • Estate Planning
  • Interpersonal Communication
  • Professional Conduct and Fiduciary Responsibility

Other credentials you may want to look out for include:

  • Chartered Financial Analyst (CFA)
  • Personal Financial Specialist (PFS)
  • Retirement Management Analyst® (FMA®)
  • Retirement Income Certified Professional® (RICP®)
  • Certified Retirement Counselor® (CRC®)

Question #4: What Is Your Niche?

Some Financial Planners may choose to work with a niche clientele - pre-retirees, doctors, educators, women, etc. Alternatively, some planners are more accommodating to helping everyone who meets some general criteria - regardless of age or profession. 

Finding a planner who works with others like you is a great way to make sure they will understand your specific needs and be familiar with the options available to you. 

Question #5: Do You Have References?

The CFP® board's website is a good place to start your search for a Financial Planner. If you are looking for a fee-only planner, the National Association of Personal Financial Advisors (NAPFA) provides a good start to find planners who carry high-level standards and ethical qualifications. Broker Check by FINRA is another helpful resource to review any complaints that may have been filed against the advisor you are considering working with. 

Question #6: What Are Your Retirement Planning Projections?

How much money will you be able to spend each year from now through your life expectancy? When I use Right Capital to help my clients answer this question, I let them know that there are some inputs they can change themselves and some inputs that I control behind the scenes.

  • Key factors you can change in Right Capital.
    • Current monthly spending 
    • Spending during retirement
    • Retirement Age
    • Savings Rates and Employer Match
  • Key factors you can’t change in Right Capital.
    • Investment returns by asset class.
    • General Inflation 
    • Health care cost inflation
    • Social Security inflation
    • Tax Inflation

You’ll want to work with a planner who is able to help you think in the long term and offer realistic expectations of what retirement may look like. They should help you balance your ability to live comfortably today while preparing you for a work optional lifestyle.

Dream Financial Planning Process ™

Whether you're managing student loan debt, starting a family, or considering buying your first home, the DREAM Financial Planning Process™ is tailored to the unique needs of busy professionals in their 30s and 40s. This process focuses more on short-term goals while you grow and evolve in your personal and professional life. If you're looking for guidance on Financial Planning, optimizing employee benefits, budgeting, student loans, and managing your 401k or investments, we can help.

Complimentary Consultation

With uncertainty surrounding the economic stability of our country, it's okay to have fears and anxieties surrounding your own savings and investments. The most productive course of action from here is to reach out to Dream Financial Planning (or whoever your trusted advisor might be) and discuss your options. It's easy to have knee-jerk reactions when it feels like the bottom is falling out, but it is imperative to make decisions using research-backed data and a level head. If you'd like a Complimentary Review and risk assessment of your investment portfolio, feel free to send me an e-mail.

Monthly Newsletter

If you're looking for guidance on your investments, you'll want to read this month's Newsletter. In my April Newsletter, I discuss Gamestop, market speculation, long-term investment returns, and 9 investing mistakes you should avoid.


Your company offers a 401k. Now what?

9 Common Insurance Mistakes to Avoid

"You’re a CFP® professional, Great what’s a CFP®?”

6 Common Financial Stress Triggers and How to Overcome Them

  1. https://www.cfp.net/get-certified/certification-process/exam-requirement/about-the-cfp-exam

Disclaimer: Dream Financial Planning, LLC does not warrant that this information will be free from error. None of the information provided on this website is intended as investment, tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. Under no circumstances shall Dream Financial Planning, LLC be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the materials in this site, even if Dream Financial Planning, LLC or a Dream Financial Planning, LLC authorized representative has been advised of the possibility of such damages. Please consult with your own advisor before making any changes to your Financial Plan, Investments, or Insurance coverage.