Four Criteria to Consider When Looking for a Financial Advisor

When looking for a Financial Advisor to help achieve your personal financial goals you want to know they’re qualified and trustworthy.  Financial advisors come in a confusing array of professional designations, with different fee structures and areas of expertise.  Below are four important criteria to consider when choosing a financial planning firm to partner with: (1) Fee-Only, (2) Fiduciary, (3) Independent, and (4) Certified Financial Planner (CFP®).

FEE-ONLY

Fee-Only refers to the compensation model by which the advisor is paid.  Fee-Only means that a financial advisor gets paid a fee directly from the client, AND ONLY from the client, with no other source of compensation.  There are no commissions on the sales of products.  There are no referral or other 3^rd party fees.  Fees are transparent and fully disclosed in writing prior to the advisor providing services.  A Fee-Only advisor’s objective is to help you achieve your personal financial goals, NOT to sell you products.  The Fee-Only fee structure reduces potential conflicts of interest, which is why fee-only financial planners are frequently viewed as the most objective financial advisors.

FIDUCIARY

Financial Advisors following a fiduciary standard are required to consider your best interests above all else when offering advice.  Because of this obligation, financial advisors who are bound by a fiduciary duty tend to have fewer conflicts of interest and thus be more trustworthy.  This ensures the advisor’s interests are aligned with yours, resulting in the utmost trust and confidence.

INDEPENDENT

An independent advisor is one who isn’t affiliated with a brokerage firm, bank, or insurance company.  Without any ties to specific companies, independent financial planners are free to offer a wider array of solutions to help you reach your goals.  Independent advisors aren’t constrained to recommending only certain products (investments, insurance, etc.) from specific companies.  This provides the freedom to find the best solutions for achieving your personal financial goals.

CERTIFIED FINANCIAL PLANNER (CFP®)

Certified Financial Planners (CFP®) are considered the standard of excellence in the financial planning industry, having completed extensive education, exam, and experience requirements while being held to rigorous ethical standards.  Additionally, Certified Financial Planners (CFP®) are required to meet extensive continuing education requirements in order to maintain the CFP® credential and designation.

Fee-Only. Fiduciary. Independent. Certified Financial Planner (CFP®).  Four important criteria to consider when choosing a financial planning firm.