Financial Planners are not all the same so what questions should you be asking?

August 25, 2011 by kathrynsjankowski

Five must ask questions for your financial planner are:

1. What qualifications do you have?  There are so many financial designations someone in the financial arena can have on their business card.  What is important is understanding how each advisers accreditation’s distinguishes their financial knowledge and which ones you should be seeking.   If its investment advice you are seeking you may want to scout out those holding the Certified Financial Analyst (CFA) designation.  These people are licensed to govern portfolios and they are well trained in the cash, stock and bond markets.  If you’re looking for someone to help you with financial strategies, such as Retirement Assessments, Estate Planning, Insurance Needs Analysis, RESP planning and the like then the minimum you want your planner to have is the Certified Financial Planning (CFP) designation.
2. What kind of experience do they have?  Some financial planning firms that are fee-based often have some of their more senior Consultants charge more per hour.  The thought is that they have the experience not to have to waste time (and, therefore your money) researching and investigating financial solutions for you.  Sometimes paying a larger fee can be less expensive.
3. What services does the financial planner offer?  Some planners specialize, like me, as a Financial Divorce Specialist, for example.  Others may specialize in elder care for seniors and they may hold designations focused on helping particular segments of the population.  Keep in mind, however, that most specialized planners have to have their minimum financial planning designation….kind of like a doctor who specializes in a particular field of medicine so you don’t have to deal with them just for their specialty…unless they have focused their business that way.
4. How are you compensated?  I’m surprised at how many clients feel they cannot ask this question.  By all means, you have a right to know.  Often bank personnel are paid a salary but they may also be rewarded for suggesting proprietary financial solutions.  Investment Advisers (IA’s) are, typically, paid by transaction with commissioned sales.  Fee-based solutions are often charged as a percentage of fees.
5. How are you regulated?  Each accreditation offers a governing body to those licensed to recommend securities.  For some financial folk who are not licensed to make recommendations they will still be regulated by some governing body. Some examples of these in Ontario and Canada are the Ontario Securities Commission, the Investment Industry Regulation Organization of Canada http://www.ida.ca/  and the Financial Planning Standards Council https://www.fpsc.ca/ and for those registered as Certified Financial Analysts you may want to look here http://www.cfainstitute.org/about/investor/adviser/Pages/index.aspx?s_cid=pwm_google_restructured_29_june_searchtext__certified%20financial%20analyst