Excerpted from Women’s Worth – Finding your Financial Confidence

How do I choose a financial planner who’s just right for me?

There are many financial planning designations, but the gold standard among them is the CERTIFIED FINANCIAL PLANNER™ mark or the CFP® designation, which signifies that the holder has passed a rigorous exam and met initial and ongoing requirements in the areas of education, experience, and ethics.

A planner who fails to meet these requirements or violates certain standards can temporarily or permanently lose the right to use the CFP® designation. Practitioners are overseen, and professional standards enforced, by the Certified Financial Planner Board of Standards, a regulatory and licensing association in Washington, DC. There are also membership associations for financial planners, such as the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA, the association of fee-only planners), which seek to educate the public about financial planning.

Any of these organizations can provide guidance in finding a competent financial planner in good standing. The CFP® Board’s search engine at www.cfp.net allows you to enter the name or location of a CFP® to determine the individual’s certification status, whether they are currently practicing, and if they have undergone any Board disciplinary action. Similarly, the websites of the FPA (www.fpanet.org) and NAPFA (www.napfa.org) provide information on their members’ specialties within the profession, such as debt management, comprehensive financial planning, or divorce planning. All three organizations also provide generic guidance on the appropriate questions to ask when interviewing planners. NAPFA has a particularly detailed checklist of questions for prescreening an advisor and a diagnostic tool that explains answers an advisor might give. The CFP Board has an informative booklet on financial scams and how to protect yourself.

Important steps

The National Program on Women and Aging advises taking the following key steps when seeking a planner:

  1. Interview more than one financial planner.
  2. Prepare questions and a statement of assets before the interviews.
  3. Ask to see a copy of a financial plan previously prepared by the planner.
  4. Check the planner’s credentials and his or her status with regulatory organizations.
  5. Be clear from the outset how the planner will be paid and what the assistance will cost you.

A survey conducted by the National Program on Women and Aging found that very few women undertook any of the above steps when choosing a planner. These women were definitely concerned with finding a professional they could trust, but few knew how to go about it. Half simply took the recommendation of a relative or friend. Only 9 percent did background checks to see if the planner had any professional sanctions (i.e., disciplinary actions.) The planner’s experience, qualifications, or record of service were virtually ignored. Furthermore, nearly half the survey respondents (43 percent) admitted that they had not discussed compensation before work began.

Information you need and questions to ask

You cannot be afraid of asking too many questions. At a minimum, this is the information you should obtain from a prospective planner:

  • A copy of the planner’s Form ADV (the annual filing the planner files with the U.S. Securities and Exchange Commission (SEC) or the state securities authority if she or he provides investment advice. Read it. While you may expect to find it dull, it is going to tell you — in detail — the planner’s services, clientele, and compensation.
  • Any pending or settled litigation or arbitration cases that the planner is involved in. Ask what organizations the planner is regulated by and contact these organizations for a background check. If your advisor is a registered representative with a broker-dealer, the Financial Industry Regulatory Authority (FINRA) is the organization to contact. If the planner offers investment advice, he should be registered with the SEC or a state securities commission. If the planner is a CFP® professional, the CFP® Board of Standards will have a record of any public sanctions the Board has taken against the planner.
  • Years of experience and employment history (this information is also included in the Form ADV). In addition, here are some suggested questions to help you evaluate whether the planner will be a good fit for you. You won’t need all of these; just pick the ones that help you determine if the planner can provide the services you need.
  • Does the planner have personal experience with any of the financial events you are concerned about? If you are worrying about the financial impacts of a divorce, for instance, ask if the planner is divorced. (You might also ask if she is willing to share whether the divorce was a “good” or a messy one.) If you are interested in starting a business, ask what her experience as an entrepreneur or business owner has been.
  • If the planner primarily offers asset management, is he also able to assist you with income and expense management? (If, for instance, you have a spending problem or need help with budgeting and taxes, a planner who specializes only in investments and portfolio management may not be the best advisor for you.)
  • What will your relationship entail in year one? How many meetings? Who will be at the meetings? Who will be your contact person? How frequently will you be contacted? When it comes to relationships, women need to know who will be calling whom and when.
  • What will your relationship entail in later years? How many meetings? Is it likely that you will still be working with the same planner? What is the career path for professionals in the planner’s firm?
  • How, if at all, are assumptions or strategies changed when planning for a woman rather than a man?
  • Are the planner’s female clients primarily widows? One of a couple? Single professionals? Business owners?
  • How much intergenerational planning does the firm do, and of what type? How often does she work with parents and/or children of clients?
  • If your values include community and charitable planning: how does he participate in the non-profit community? Does he serve on any not-for-profit boards? What kinds of charitable gifts has he helped clients make?
  • If your values include self-development or maximizing your earning potential: does she have life-coaching skills or has she used, or referred clients to, professional coaches? Ask, too, whether she has helped with contract or salary negotiations or has expertise in business and employee benefits.
  • What types of financial issues or situations are referred to other professionals? For example, an attorney must prepare estate-planning documents, even if your planner helps you think through how you would like your estate handled and distributed. If the issues referred out are issues you will need help with, ask if you can have the name of a client who has used these references. Call this client and ask how the referral was handled. Was the client satisfied? Did the planner stay in the loop with the other professional?
  • What efforts does he make to educate the firm’s clientele? Are seminars offered? Can you get recommendations for any good financial books or periodicals? Does the firm send out regular email bulletins?
  • What concrete examples can she provide of ways her advice has benefited her clientele?
  • How many clients does he handle? Ask if you are typical. Since many planners charge an asset management fee, generally ranging from 0.5 to 1.5 percent of portfolio value, ask if you would be considered a small client—which usually means, from a planner’s perspective, that your net worth and/or income is less than his average client’s.
  • As a small client you may not get the attention or treatment you would like. If, at the other extreme, your assets are significantly larger than the planner’s average client, this, too, is reason to think twice. The planner may be extremely interested in having you as a client and will work very hard not to lose you, but at the same time, he may give you the kid-glove treatment when what you really need is a cuff to the ear. (You should not seek coddling from your planner. You need to be challenged to be and do your financial best.)

Can you relate?

Women “are looking for help in setting up processes and procedures to address wealth,” according to Mindy Rosenthal, managing director of Campden Media and co-author of a study of affluent women by Wilmington Trust and Campden Media in association with Relative Solutions. Yes, we love great desserts, but we also want the recipes and to know where they should be filed.

We happen to know of some planners who can guide you in your financial journey. Click here to read a few of their stories and see if you find someone you can relate to.