“A goal without a plan is just a wish.”  Antoine de Saint-Exupery, The Little Prince


“When it is obvious that the goals cannot be reached, don’t adjust the goals, adjust the action steps.”  Confucius

When you are seeking a financial professional, you may be confused by your choices. Many professionals help you with planning when giving you financial advice whether making investment recommendations for your portfolio or providing tax-efficient savings.

“Financial planner” or “financial advisor” are terms often used interchangeably. They may provide similar services. However, their level of education, certifications, designations, and standards may be quite different.

The Main Differences When Seeking A Financial Advisor


1. Type of Financial Services You Are Looking For

You may be looking for someone to advise you for a single purpose like debt management or a comprehensive plan. Here, we will focus on how to choose a financial advisor or planner. This type of advisor can handle an array of services (discussed below) to strategically guide you towards your goals.

You may turn to accountants and attorneys for setting up a new business, debt management, bankruptcy, taxes, and estate planning.

2. The Fee Structure

Generally, your fees range from fee-based only, commission-based only, or a blend of fees and commissions. However, there may be extra costs for additional services such as insurance.

3. Education, Certification and Designation Requirements Vary

Financial advisors or planners have a bachelor’s degree with an accounting or finance focus as the minimum requirement. Advanced educational degrees are not uncommon. Certified financial planners (CFPs) are distinguished by their course of study, rigorous exam, required experience and high standards.

As much as these differentiators may substantiate your selection, consider your candidate’s soft skills such as adaptability, communication, and problem-solving. We have a list of questions below you should ask your candidate when deciding who to work with.

 4. How They Are Regulated

Different regulators play a role according to primary designation. Financial planners may be regulated according to their professional designation. Planners with CFP credentials are subject to the requirements of the Certified Financial Board of Standards.

An investment advisor who also provides financial planning is regulated by the Securities Exchange Commission (SEC) and/or the state where they do business.

An accountant preparing a financial plan is regulated by the state Board of Accountancy.

Different Financial Services


1. Money and Debt Management

Consider a money coach or credit counselor when you need help on saving money, setting up a budget, reducing expenses, and debt management. You often can get free assistance from a certified credit counselor by searching on the nfcc.org website.

Accredited financial counselors or AFCs can aid you in money management and may be found through their organization  https://www.afcpe.org/certification-and-training/accredited-financial-counselor/.

Related Post: How To Pay Down Your Debt For Better Financial Health

2. Investment Advice and Trades

Investment advisers and brokers provide all manner of investment services from do-it-yourself online trading to full-scale investment advice and money management. Generally, investment advisers and broker-dealers must be registered with the SEC and the Financial Industry Regulatory Authority (FINRA) and/or state regulators. They are subject to the suitability standard, less onerous than the fiduciary duty.

A Registered Investment Advisor (RIA) advises high-net-worth individuals on their investments and manages their portfolios. They have a fiduciary duty to their clients which means they provide investment advice by acting in their clients’ best interests.

3. Financial Planning

Financial planners are financial advisors who provide clients with a range of services. They can help you create a simple one-time financial plan if you are just starting out, grapple with a specific financial objective or provide a comprehensive goal-based plan. The latter may encompass savings, investments, college savings, insurance, retirement, tax planning, and estate planning.

Each plan should be tailored to your needs and provide a disciplined approach to achieve your financial goals. Financial planners will want to gather data from your personal and financial life and make forecasts to achieve wealth.

A core financial plan includes:

Cash flow management will look at the specifics of your current and projected budget and net worth, debt management, creating an emergency fund, savings for a house, vacations, college tuition, and retirement.

Risk management will consider life, disability, and medical insurance protection  for you and your family.

Wealth management will address investments, diversification, risk tolerance and asset allocation.

Related Post: 10 Tips To Diversify Your Investments

Tax and retirement planning should provide strategies to minimize your tax burden using capital gains strategies, charitable giving, tax-free and tax-deferred retirement saving. Plans may consider what kind of lifestyle will be required for retirement years.

Estate planning involves questions about wealth transfer to loved ones in the most appropriate and efficient manner.

Related Post: Your Guide To Basic Estate Planning

This Designation Is Preferable

Certified Financial Planners, or CFPs, have an important designation issued by the Certified Financial Planner Board of Standards. This designation is difficult to obtain. It requires passing a rigorous exam testing in specific personal finance areas.

CFPs must commit to continuing education on financial and ethical matters. They need at least three years of experience and must adhere to fairly stringent standards to earn and maintain their title. Before hiring a financial planner, you should verify the status of anyone claiming to be a CFP and whether he/she has undergone a disciplinary process.

When choosing a planner, CFP credentials may provide added comfort and confidence in your choice. However, it is not an absolute guarantee of excellent performance. You want to pick the right person or team with the right fit for your needs.

Look For A Fiduciary

At a minimum, you want planners who are experts, professional and trustworthy. Your planner should be held to a fiduciary standard. This is a higher standard requiring the planner or investment adviser to act in the best interests of their clients at all times.

Fiduciary duty standard is the highest standard of care referring to the financial professional.  A fiduciary is someone who holds a legal and ethical relationship with their clients. They manage people’s money in their clients’ best interests, rather than in their own interests.

Registered Investment Advisors or RIAs help you with managing your assets, largely by way of your investment portfolio. These professionals are knowledgeable about market patterns, investing in stocks, mutual funds, and other securities. They are fiduciaries making recommendations in the best interests of their clients. Their pay structure is fee-based but earn commissions from the sale of financial products.

Don’t Paint Advisers With A Broad Brush

Investment advisers and brokers, who work for broker-dealers and offer investment advice are largely commission-based. They may have obtained CFP credentials through the hard work required.

From my experience, these individuals cannot be painted with a broad brush. Many are product salespeople interested in selling the latest service from their firm, yielding commission dollars. Other advisers are problem-solvers for their clients, helping them to manage their assets as a business. If you are fortunate to find one of these value-added professionals, grab them.

Financial professionals who work for brokers are held to a suitability standard set by FINRA. This is a lower standard than the fiduciary standard, requiring that recommendations are suitable for their clients. For example, buying risky securities would not be suitable for retirees.

Financial Planners With Specialities

You may be seeking a financial planner for a specific goal like buying a house, retirement planning or estate planning . Some planners specialize in specific areas such as addressing families with special needs, women executives, or planning for single people.

Related Post: 10 Ways For Women To A Financial Independence

Look For Fee-Based Planners

The pay structure differs for different financial professionals from fee-based-only, commission-based only or a blend. When you want to develop a financial plan, I recommend seeking a fee-based adviser with more incentives to help with your financial goals. Fee-based structures can be fees by the hour, flat fee for your plan, or a percentage of your annual assets.

Hourly rates may be in the $300-$500, with one-time financial plan costs of $1000-$3000+, and annual fees of percentages ranging 0.6%-1% of assets under management (AUM). Finding a planner that charges a flat rate or by the hour is best for those just starting out to make money, who want a simple financial plan, and don’t yet have a lot of assets.

Depends On Your Needs

You may be seeking a one-time financial plan after getting a sizable bonus at your firm or to help you with an inheritance. Others want to have a planning team in order to be able to work with them on an ongoing basis. There are a plethora of financial strategies to handle for a family moving through changing life cycles.

Trustworthy financial planners can help you build wealth with a disciplined approach. They may help you alleviate the financial stresses that you encounter when saving for a house, college tuition, insurance, and retirement using the most tax-efficient strategies.

When you have a busy career earning a high income it may be difficult to wrestle with these personal finance specifics. Paying $10,000-$20,000 annually on a $1-$2 million portfolio which may produce savings isn’t so bad.

Many financial planners require a minimum of assets to invest, usually in the $250,000 range or significantly higher, and may not work with you. Other planners may prefer to grow with beginner clients where they can add a lot of value, particularly as clients have expanding family needs.

Where To Find The Right Financial Planner

The National Association of Personal Financial Advisors (NAPFA)  are fee-only planners who adhere to the fiduciary standard. They accept no commission-based planners. Their standards are high and generally meet or exceed the requirements needed for CFP credentials. Ask your friends and colleagues if they would recommend someone to you.

If you are just starting out with less initial planning needs, you may consider the Garrett Planning Network. They are certified financial planners or persons working towards obtaining their credentials. They tend to focus on smaller projects for an hourly fee.

XY Planning Network is relatively new, focusing on young professionals looking for fee-based financial planners with the CFP designation. Their organization serves Generation X and Millennials. Their fees appear to be within the ranges for hourly rates or flat fees.

There are great Facebook Groups to visit, such as Females And Finance run by Sheryl Hickerson, that have can help you find the right person for you.

Do I Need A Financial Planner?

You can develop a simple financial plan on your own as you are starting out. Even if you are not going to work with a financial planner, you need to give some thought to your short-term and long-term goals. Managing money well is time-consuming and requires expertise in many areas.

As your assets grow, you may need to have guidance and assistance in developing financial strategies to achieve your goals, and develop a comprehensive plan with annual updates.

You may also want to consider a robo-advisor for asset management such as Betterment, Wealthfront and Schwab Intelligent Portfolios. Their fees are typically lower, charging 0.25%-0.90% of assets under management.

10 Questions You Should You Ask When Seeking A Financial Adviser

Professional Caliber

1. What are your qualifications, credentials, and experience?

You will want to know who you are dealing with in terms of expertise, education, certifications and experience.

2. Do you work with a team and how do you work together?

Financial planners often have their own specialties and overlap with others who can complement their skills.

3. Are you a fiduciary?

A fiduciary is held to a stringent duty of care. You want to know what standard they are being held to. It is your money and your financial future. You want your advisor to be working on your behalf with your best interests in the forefront.

What Does This Cost

4. What are your fees and what are my costs all-in?

Understand their fee structure. Be clear as to what may be the extra costs you may be incurring, such as insurance policies.

5. How will I be communicating with you and your team?

Biannual plan reviews are common. How often will they be reviewing your financial plan with you.  If you will be having an ongoing relationship with your financial planner, it is important to understand how you will reviewing and updating your plan. If you have an ongoing relationship, what kind of communication should you expect, particularly when you are making changes.

6.  How they will work with you?

Will they take the time and have the patience to explain difficult concepts to you. This does matter and it may take time to build confidence and a good rapport.

Characteristics of Your Financial Planners

7. What is your investment philosophy?  You want to understand your planners’ basic beliefs regarding growth and value investing. Markets can be turbulent so you need to know how may they address investments during recessions.

8. How should I measure success in our financial plan?

It is important for you to understand the benchmarks that will provide you with results relative to your financial goals. There may be different measurements for various aspects of your plan.

9. What added value may I expect from you as our financial advisor?

This is a difficult question. Of course, you should expect expertise, professionalism, and trust. You want to know what kind of relationship you will have. When you want to make an investment that they believe is not a sound one, will they tell you “No”? It is important that they have your back.

10. What are some of the criticisms your clients say about you and your team?

No one person is perfect so knowing those criticisms will help you measure your prospective financial planner and how he/she fits with your needs.

Final Thoughts

Prudent financial planning is an essential element to achieving your short and long term goals and supporting your family values. What are you looking for when seeking out a financial advisor? What traits are important to you? We would like to hear from you!

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