There are a lot of questionnaires out there and it’s important to use one that is asking the questions that matter to you. I’ve linked a few below from a couple financial planning organizations who support a fee-only fiduciary business model: National Association of Personal Financial Advisors (NAPFA) and Garrett Planning Network.

Before using a questionnaire, look it over yourself and think about the answers that you’d like to hear (the long questionnaire from NAPFA has an answer guide). Do you want to work with someone who is not a fiduciary (see previous post on why you should care)? What about if they accept commissions? Is that ok to you if you want to receive all financial planning services and implementation from one person?  Or is hourly financial planning or a fixed retainer what you wanted?  Do you want a written plan? Do you feel they should be a Certified Financial Planner™ professional if they’re providing a comprehensive plan to you (see alphabet soup post)?

Maybe you’ll want to take questions from all three (and other questionnaires out there) in order to address all your concerns. It’s your money and your goals, make sure you get the answers you need to feel comfortable with who is providing you advice!

Garrett Planning Network (fee-only hourly planning network) financial planner interview questionnaire

National Association of Personal Financial Advisors (fee-only planner network) – Short Questionnaire

National Association of Personal Financial Advisors (fee-only planner network) – Long Questionnaire

Although I enjoyed all of those classes, I found my passion with personal finance.  I realized I could have a career where I worked directly with people to define their goals and create a plan to meet them, then got to dive into the numbers through spreadsheets and analytics which I love, too.  Perfect blending of both worlds!

The CFP® is the top designation for financial planning and is the most rigorous to achieve.  It requires education through a board-certified program offering a certificate or degree, three years of experience in the field, an agreement to abide by the code of ethics, and successful passing of the 10-hour exam.  Then there are 30 continuing education hours required to complete bi-annually.

For those providing comprehensive financial planning, this is really the designation to have.  Other designations focus on different specialties within the industry and I’ve outlined some of the others that you may see:

CFA – Charted Financial Analyst – This is the top designation for those that manage money.  You’ll often see this designation held by mutual fund managers and by those at firms that specialize in money management.  Very rigorous series of exams required to complete.

CIMA – Certified Investment Management Analyst – This designation is not as rigorous as the CFA and is meant for those providing investment advice but assisting individuals in setting their asset allocation and screening money managers or mutual fund managers for those individuals.

CLU – Charted Life Underwriter – For those offering insurance services, this is the designation you may see.  This designation requires that a series of classes be completed offered by The American College.

Other designations that are not as rigorous to obtain, but indicate an interest or specialty in different areas:

CDFA – Certified Divorce Financial Analyst – Planners that can assist in the divorce process from a financial perspective to plan and educate for an equitable splitting of the assets.

CCPS – Certified College Planning Specialist – Planners that specialize in planning for college utilizing grants, scholarships, loans, investment options and tax strategies.

There is a smorgasbord of additional financial-related designations (over 80 that I last saw) that you may come across.  Be careful about being influenced by the “alphabet soup” after some people’s names.  Ask about the requirements for obtaining the designations and the continuing education requirements as well.  Honestly, I’ve seen that some designations don’t require that much work to achieve (other than perhaps a large check to the institution administering the designation), and then there isn’t any continuing ed requirement to stay on top of the changes in that area.

Let’s start with a definition of what is a financial planner.  A financial planner is someone who takes a “big picture” view of where you are today, helps you define the goals you want to reach in the future, and then works with you to develop a roadmap to get there.  A comprehensive financial plan will normally cover budgeting, debt reduction, personal insurance (life, disability, health, long-term care), property and casualty insurance,  taxes, retirement planning, investments, estate planning, real estate (primary residence and investment properties), and college funding (for children and grandchildren).  Sometimes a financial planner will be asked to focus on a single financial issue, however, it should be done in the context of your overall situation.

Before hiring a planner or if you’re working with an advisor now, ask yourself what you are looking to get out of the relationship?  Is it a comprehensive plan or ongoing comprehensive advice covering your entire situation, or are you looking to address one area of your financial life, such as investments, insurance, or estate planning?

The other area to consider when choosing a financial planner is how you will be charged for the planning advice.  There are a few ways that a financial planner or a firm can be paid:

1)      commissions for the sale of products, such as insurance or investments, to implement your financial plan,

2)      fee-based, which traditionally has meant a combination of commissions and fees paid direct by the client, though some individuals and industry definitions are now using this interchangeably with fee-only, and

3)      fee-only, which can mean an annual percentage of assets under management or financial planning based on hourly advice, including projects and retainers.

When working with a planner you should ask about all the various charges that both the individual planner and the firm will receive for the business that you do with them.  Some firms, generally the larger ones, may receive ongoing fees paid direct by you for managing your investment accounts and also receive additional revenue based on the securities purchased in your account.  Not all of the revenue the firm receives is disclosed on your statements, so it’s up to you to ask.

Our next article will focus on the primary certifications held by financial planners and provide a questionnaire to use when selecting an advisor.