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Financial Planner: When to Start Working With Them

Financial planners play a crucial role in helping you achieve your financial objectives by providing personalized advice, guidance, and comprehensive financial planning services.

Have more questions about financial planning? Then, working with a financial planner may be the right move.

What are Financial Planners?

Financial planners are professionals who provide personalized advice and guidance to help individuals and families achieve their financial goals. They analyze various aspects of a client’s financial situation, such as income, expenses, assets, liabilities, investment portfolio, retirement plans, insurance coverage, tax strategies, and estate planning needs.

Based on this analysis, they develop comprehensive financial plans tailored to each client’s unique circumstances, goals, and risk tolerance.

Types of Financial Planners

  1. Certified Financial Planner (CFP): CFPs are certified professionals who have completed extensive education, experience, and examination requirements set by the Certified Financial Planner Board of Standards. They are trained to provide holistic financial planning advice across various areas, including retirement planning, investment management, tax planning, estate planning, and insurance.
  2. Registered Investment Advisor (RIA): RIAs are financial professionals or firms registered with the Securities and Exchange Commission (SEC) or state securities regulators. They offer investment advisory services and are held to a fiduciary standard, requiring them to act in the best interests of their clients.
  3. Chartered Financial Analyst (CFA): CFAs are professionals with expertise in investment management and financial analysis. While they primarily focus on investment research and analysis, some CFAs also offer financial planning services.
  4. Personal Financial Specialist (PFS): PFS is a designation offered by the American Institute of Certified Public Accountants (AICPA) to CPAs who specialize in financial planning. PFS professionals provide comprehensive financial planning services, often integrating tax planning and accounting expertise into their practice.

What Do Financial Planners Offer?

Financial planners perform various tasks to help you achieve your financial objectives.

  • Financial Assessment: They evaluate your financial situation, including income, expenses, assets, liabilities, and goals.
  • Goal Setting: They work with you to define short-term and long-term financial goals, such as retirement planning, education funding, or wealth accumulation.
  • Financial Planning: They develop customized financial plans that outline strategies and recommendations to achieve your goals, covering budgeting, investing, tax planning, insurance, and estate planning.
  • Implementation: They assist you in implementing the recommendations outlined in the financial plan, such as opening investment accounts, purchasing insurance policies, or setting up retirement plans.
  • Ongoing Monitoring and Review: They regularly review and update the financial plan to reflect changes in your circumstances, goals, and market conditions.

Differences Between Financial Planner and Financial Advisor

The terms “financial planner” and “financial advisor” are often used interchangeably, but there are subtle differences in their meanings and roles:

Financial Planner

A financial planner is a professional who helps individuals and families create comprehensive financial plans to achieve their goals. These plans may include retirement planning, investment planning, tax planning, estate planning, and risk management.

Financial planners typically take a holistic approach to financial planning, considering various aspects of a client’s financial situation and goals to develop personalized strategies.

They may hold certifications such as Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC), which require rigorous education, experience, and ethical standards.

Financial Advisor

A financial advisor is a broader term encompassing professionals who provide financial advice and guidance to clients. This may include investment advice, retirement planning, insurance planning, tax planning, and other aspects of personal finance.

Financial advisors may specialize in specific areas such as investment management, insurance sales, or retirement planning, and they may hold various designations such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Registered Investment Advisor (RIA).

Some financial advisors may focus primarily on managing investments, while others may offer comprehensive financial planning services similar to those provided by financial planners.

While there is overlap between the roles of financial planners and financial advisors, the key distinction lies in the scope of services offered and the emphasis on comprehensive financial planning.

Which Expert is Best?

Financial planners focus on creating holistic financial plans, while financial advisors may provide various financial services tailored to their client’s needs and goals. Ultimately, both professionals play essential roles in helping individuals and families achieve financial success and security.

Is It Time to Work With a Planner?

Deciding when it’s the right time to work with a financial planner depends on your financial situation.

Here are some indicators:

  1. Complex Financial Situation: If you have multiple financial goals, significant assets, or complex investment portfolios, a financial planner can help you navigate these complexities effectively.
  2. Life Transitions: Major life events such as getting married, having children, changing careers, inheriting wealth, or nearing retirement can benefit from the expertise.
  3. Lack of Financial Knowledge: If you feel overwhelmed or lack confidence in managing your finances, working with a financial planner can provide valuable education and guidance to help you make informed decisions.
  4. Specific Financial Goals: When you have specific financial goals such as buying a home, saving for college, planning for retirement, or starting a business, a financial planner can create a tailored plan.
  5. Need for Objective Advice: If you prefer unbiased, objective advice that considers your best interests, a financial planner can offer a fresh perspective and help you avoid emotional biases in financial decision-making.

Ultimately, the decision to work with a financial planner is a personal one and depends on your individual circumstances and needs. If you’re unsure whether it’s the right time to work with a financial planner, consider scheduling a consultation. Many offer free consultation with the first appointment.

What to Look For in a Financial Planner

In some jurisdictions, anyone can call themselves a financial planner, regardless of their qualifications or expertise. This lack of regulation underscores the importance of conducting thorough due diligence when selecting a financial planner.

When looking for a financial planner, there are several key factors to consider:

CriteriaDescription
Qualifications and CredentialsLook for financial planners who hold reputable credentials such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Personal Financial Specialist (PFS). These designations require rigorous education, experience, and ethical standards, indicating a high level of expertise in financial planning.
Fiduciary DutySeek financial planners who take a holistic approach to financial planning. This approach addresses various aspects of your financial life, such as budgeting, investing, tax planning, insurance, retirement planning, and estate planning. A comprehensive approach ensures that all aspects of your financial well-being are considered.
Experience and Track RecordEvaluate prospective financial planners’ experience and track record, including their years in practice, areas of specialization, and client testimonials or references. Look for planners who have successfully worked with clients similar to you regarding financial goals and circumstances.
Transparency and CommunicationEnsure the financial planner communicates transparently about their services, fees, and potential conflicts of interest. They should be forthcoming with information and responsive to your questions and concerns.
Fee StructureUnderstand the financial planner’s fee structure, including how they are compensated (e.g., hourly fees, flat fees, percentage of assets under management), and ensure it aligns with your preferences and budget. Be wary of planners who earn commissions from product sales, as this may create conflicts of interest.
Compliance and RegulationVerify that the financial planner is properly licensed and registered with relevant regulatory authorities such as the Securities and Exchange Commission (SEC) or state securities regulators. Check their disciplinary history and ensure they have a clean record with no history of misconduct or disciplinary actions.
Holistic ApproachSeek financial planners who take a holistic approach to financial planning, addressing various aspects of your financial life such as budgeting, investing, tax planning, insurance, retirement planning, and estate planning. A comprehensive approach ensures all aspects of your financial well-being are considered.

It’s important to note that not all financial planners are the same. They may vary in terms of qualifications, expertise, services offered, and fee structures. While many financial planners hold certifications and adhere to high ethical standards, some individuals may not meet these criteria.


How to Find a Financial Planner

Here are some steps to help you find a suitable financial planner:

Step 1: Identify Your Needs

Determine your financial goals, preferences, and the specific services you require from a financial planner.

Step 2: Research Credentials

Look for planners with reputable credentials such as CFP, RIA, CFA, or PFS, as these designations signify expertise and commitment to professional standards.

Step 3: Check Qualifications and Experience

Evaluate prospective planners’ qualifications, experience, and track record to ensure they have the expertise to meet your needs.

Step 4: Consider Fee Structure

Understand the fee structure of potential planners, whether they charge hourly fees, flat fees, or a percentage of assets under management (AUM), and choose one that aligns with your preferences and budget.

Step 5: Seek Referrals and Recommendations

Ask friends, family members, or trusted professionals for recommendations or referrals to reputable financial planners they have worked with or know of.

Step 6: Interview Prospective Planners

Schedule initial consultations with multiple planners to discuss your financial situation, goals, and preferences. Ask questions to assess their expertise, approach, and compatibility with your needs:

  1. What are your qualifications and credentials?
  2. How do you charge for your services, and what is your fee structure?
  3. What is your approach to financial planning, and how do you work with clients?
  4. Can you provide examples of clients with similar financial situations or goals that you have worked with successfully?
  5. How do you stay updated on changes in the financial industry and regulations?
  6. What ongoing support or services do you offer after implementing the initial financial plan?

Here’s a table to help you compare and evaluate different financial planners:

CriteriaDescriptionFinancial Planner AFinancial Planner BFinancial Planner C
Qualifications and CredentialsDoes the planner hold reputable credentials such as CFP, CFA, or PFS?CFPCFP, CFANone
Fiduciary DutyIs the planner legally and ethically obligated to act in your best interests?YesYesNo
Experience and Track RecordHow many years of experience does the planner have, and what is their track record with clients?10 years, positive client testimonials5 years, positive client testimonials15 years, positive client testimonials
Transparency and CommunicationDoes the planner communicate transparently about services, fees, and potential conflicts of interest?Clear fee structure and disclosure of conflictsClear fee structure but limited disclosureLimited transparency and communication
Fee StructureWhat is the planner’s fee structure, and does it align with your preferences and budget?Flat fee based on services renderedPercentage of assets under managementCommission-based on product sales
Compliance and RegulationIs the planner properly licensed and registered with relevant regulatory authorities?Registered with SEC or state securities regulatorsRegistered with SECNot registered, lacks regulatory oversight
Holistic ApproachDoes the planner take a comprehensive approach to financial planning, addressing all aspects of your financial life?Yes, covers budgeting, investing, tax planning, insurance, retirement planning, and estate planningYes, covers budgeting, investing, and retirement planningLimited focus on investment management only

Use this table to assess each planner’s strengths and weaknesses and determine which one best aligns with your needs.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of phroogal.com and thesmilelifestyle.com. His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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