When and How to Hire a Financial Planner

Posted on 10/15/2010

No matter what stage of life you’re in, or what’s in your bank account, hiring a financial planner can be a good idea. Look at it this way-- you may be able to burn calories without the help of a personal trainer, but you may not reach your fitness goals as fast, or at all. Just like a personal trainer, a professional financial planner can be your guide to reaching your financial goals. Here are some tips to help you know when and how to hire a financial planner.

Talk to Several Experts - Not all financial planners are the same. But most do offer free consultations. Set up initial meetings with several pros. Ask questions and get educated. The more you know the better prepared you’ll be about choosing the right financial planner.

Be Wary of Hiring Friends - Studies have shown that two out of five of us get money advice from friends and family members. But some experts say hiring a friend as a financial planner may not be the way to go. It adds emotions to the equation that wouldn’t be there if you hired someone that didn’t know your secrets, fears and pet peeves.

Do a Background Check - When you consider that you’re going to be giving your financial planner very personal information and access to your finances, it makes sense to do a background check. Use a free resource like BrokerCheck or call references.

Ask Lots of Questions - In addition to doing a background check to find any red flags, ask potential financial planners questions. Not sure what to ask? Get help from this AARP Financial Adviser Questionnaire or this list of questions prepared by the Certified Financial Planner Board of Standards.

Consider Payment - Paying for a financial planner is probably going to be a factor in your decision of who to hire. There are three commonly used forms of payment including: fee-only, fee-based and commission-based. Keep in mind that a financial planner working on commission may be focused on selling particular products than in providing unbiased advice.

Identify Goals and Share Them - Before you decide on a financial planner, take some time to establish your own financial goals. Be sure to share these goals with the experts so you can make sure they are the right person to guide you along the way.

By Alison Storm

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