How To Interview A Financial Planner
Financial planners can help you plan for retirement, find the best way to finance a new home, save for your child's education or simply help put your finances in order. Whatever your needs, working with a professional financial planner is a crucial step in helping you meet short-term and long- term goals that will help ensure your future financial well-being.
Finding the right planner is extremely important because your choice will almost certainly affect the security of your financial future. The following questions will help you interview and evaluate financial planners to find a competent, qualified professional with whom you feel comfortable and whose business style and values suit your needs. Any professional will welcome the questions.
1. WHAT ARE YOUR QUALIFICATIONS?
Many people offering financial services call themselves financial planners. However, financial planning is a detailed, comprehensive process requiring hands-on experience and a strong technical understanding of topics such as personal tax planning, insurance, investments, retirement planning and estate planning – and how a recommendation in one area can affect the others.
There is minimal legislation in place within Canada for individuals who call themselves financial planners to obtain any credentials whatsoever. Be sure that your planner is appropriately trained, certified and held accountable to professional oversight – as a Certified Financial Planner (CFP)®.
- Ask about their qualifications to offer financial advice and if, in fact, they’re a qualified planner.
- Ask what training they have successfully completed.
- Ask what steps being taken to keep up with changes and developments in the financial planning field.
- Ask whether they hold any professional credentials including the CFP®.
2. WHAT EXPERIENCE DO YOU HAVE?
Experience is an important consideration in choosing any professional. Ask how long the planner has been in practice, the number and types of firms with which they have been associated, and how their work experience relates to their current practice. Inquire about what experience the planner has in dealing with people in similar situations to yours and whether they have any specialized training.
3. WHAT SERVICES DO YOU OFFER?
The services a financial planner offers will vary and depend on their credentials, registration, areas of expertise and the organization for which they work. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or taxation. Those who sell financial products such as insurance, stocks, bonds, and mutual funds, or who give investment advice, must be registered with provincial regulatory authorities and may have specialized designations in these areas of expertise.
4. WHAT’S YOUR APPROACH TO FINANCIAL PLANNING?
The types of services a financial planner provides can vary. Be sure to work with a planner who considers your overall financial goals, values and attitudes even if they specialize in a specific area such as taxation, estate planning, insurance or investments. As an example, an investment specialist’s portfolio recommendations should consider your investment objectives and risk tolerance, but as well your cash flow needs, tax situation, risk management and estate goals.
Ask whether the individual deals primarily with clients with specific net worth, levels of income or investable assets, and whether the planner will help you implement the plan developed or refer you to others who will do so.
5. WILL YOU BE THE ONLY PERSON WORKING WITH ME?
It is quite common for a financial planner to work with a team in their organization to develop and implement financial planning recommendations. You may want to meet everyone who will be working with you. Financial planners often also work with other professionals, including ones you already use, such as your lawyer and accountant.
6. HOW WILL I PAY FOR YOUR SERVICES?
Your planner should disclose in writing how they will be paid for the services they provide. Understand how your potential planner will be compensated and choose whatever model works best for you. Planners can be paid in several ways:
- Some planners receive their compensation directly from the product manufacturer when you purchase a product. For example, their compensation is part of the management fee of a mutual fund. In this case no money is exchanged between the client and the planner. Rather, the cost to the client is embedded in the cost of the mutual fund.
- Charging a fee as a percentage of the assets they are managing or administering on your behalf.
- Charging an hourly or set fee for the service they provide.
7. HOW MUCH DO YOU TYPICALLY CHARGE?
While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs would include hourly rates, flat fees or the percentage received as commission on products you may purchase as part of the financial planning recommendations.
8. WHO, BESIDES ME, BENEFITS FROM YOUR RECOMMENDATIONS?
Ask the planner – regardless of fee structure – if they have a written professional obligation to put your interests ahead of their own. CFP® professionals must annually attest to a code of ethics that clearly states your interests will always come first.
9. ARE YOU REGULATED BY ANY ORGANIZATION?
Financial planners who sell financial products such as securities and insurance or who provide investment advice must be regulated by provincial regulatory authorities. Those with specialized designations are also subject to professional standards of competence, ethics and practice that are set and enforced in Canada by the organizing bodies.
It’s also appropriate to ask if the financial planner has ever been the subject of disciplinary action by any regulatory body or industry association. You can verify the answer by contacting the relevant organization.
10. CAN I HAVE IT IN WRITING?
Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.
Article details by www.financialplanningforcanadians.ca