What is a Financial Planner?
A financial planner is a professional that helps people manage various aspects of their finances. They will usually draft a financial plan for their clients to follow with the goal of improving the client’s financial security now and in the future.
Services Offered by Financial Planners
The services offered by financial planners are quite broad. Basically anything that could possibly affect your finances can be managed by a financial planner. Financial planner’s expertise includes:
- Estate planning
- Taxes
- Savings
- Investments
- Insurance
- Retirement planning
Some financial planners will work with you to put together a comprehensive plan that includes all of the elements listed above while others specialize in just one financial area. Look out for people who call themselves financial planners but only offer a few products that they are likely making commissions off of.
Before Hiring a Financial Planner
There are a number of things to consider before you hire a financial planner. Because financial planners offer such a wide array of services it’s important that you understand exactly what it is that your financial planner can offer. It’s equally important that you know what it is you need from a financial planner to make sure they have the expertise you’re looking for.
Another thing to consider is how the financial planner will be paid. Some financial planners charge a flat fee while others charge by the hour. It’s also possible for a financial planner to work off of commissions or a combination of fees and commissions.
Before you hire a financial planner you must be fully aware of how the financial planner will be compensated.
The Importance of Finding a Certified Financial Planner
You’ll want to make sure that your financial planner is certified to ensure that they are knowledgeable and meet ethical standards that have been set by official organizations.
There are a number of certifications for financial planners. However, the Certified Financial Planner (CFP) certification provided by Certified Financial Planner Board of Standards, Inc. is well known in the industry. There are a number of designations that FINRA has outlined in their handbook ‘Understanding Investment Professional Designations’.
Before hiring a financial professional, ask about their certifications and then check with each organization to make sure they in fact earned the certification and that they are still in good standing. You may also want to see what the experience and education requirements are for receiving the certification.
If a financial planner offers advice on investments then they must be registered with the SEC and/or your state securities regulator.