A financial planner offers a variety of benefits. The right individual can help you achieve a long-term financial goal or guide you toward a lifetime of financial security. Unfortunately, many individuals have trusted their money to the wrong financial planner, leading to lost assets and, in some cases, financial ruin.
First, it is important to understand the role of a financial planner. These professionals help you make wise decisions about how to spend, save, and invest your money. By reviewing your financial information, along with inflation data and investment return analysis, financial planners create projections of the best way for you to meet financial goals, such as buying a house or saving for retirement. At The Frankowski Firm, we want to help our clients make wise choices about their finances. That is why we have created this list of tips for choosing a financial planner.
Conduct a background check on your financial planner
Background information is an excellent indicator of a financial planner’s performance. Ask candidates about their criminal history. A credible financial planner should also have no objection to providing references for past and current clients who can vouch for their integrity and abilities.
You also want to inquire about any previous sanctions or investigations into their business practices by regulatory bodies within the financial industry. Depending on their certification type, their certifying body may provide disciplinary records for public review. For example, the Certified Financial Board (CFP) maintains a database of disciplinary actions that is accessible here. Take advantage of these resources to protect your finances, as well as your family.
Ensure the legitimacy of your planner’s certifications
Financial planners can carry various certifications. A CFP designation is a good step in the direction of credibility. These professionals have completed required training courses and accumulated a requisite amount of experience within the industry. The CFP also maintains ethical standards and sanctions planners who fail to adequately meet them.
The National Association of Personal Financial Advisors (NAPFA) is a professional association for planners. All of its members are compensated through fee-only structures, which means that they do not accept commissions from third parties. NAPFA members also sign a pledge to always work in the best interests of their clients.
Understand your planner’s pay structure and fiduciary duty
Your planner’s pay structure can significantly impact his or her ability to effectively assist you. Some planners receive commissions from third parties, such as life insurance companies or investment firms. These planners may try to force products on your for their own financial benefit. Fee-only planners are paid solely from client fees, earning no commissions from outside parties. They generally take a percentage of your assets for their compensation. While this is a more desirable option than commission planners, it still does not guarantee the best fit.
There are a number of resources out there which are free to investors. We have created this list of helpful resources for you, so that you can find the information you need.
Choosing the right investment firm can be a challenge. We want to make sure you have the tools you need to be successful. If your broker or advisor acts negligently, we can protect your rights. For effective legal assistance with investment matters, complete our contact form or call us at 888.741.7503 to speak with an experienced broker negligence attorney at the Frankowski Firm.