- One problem in the financial-planning sector is that there are no regulations regarding who can claim to be a financial planner. Some people in the industry are essentially salespeople for certain financial products, and they're not experienced in managing other people's financial portfolios. According to an MSN Money article titled "8 Things Your Financial Planner Won't Tell You," less than one-fourth of the estimated 250,000 people in the industry are certified financial planners. The certification is awarded by the Certified Financial Planner Board of Standards to people who meet education, experience, exam and ethics requirements.
Chartered financial consultant and personal financial specialist also are recognized finance credentials in the insurance and accounting industries. - A "New York Times" article titled "Finding Financial Advice in an Age of Bad Behavior" warns against putting too much focus on a financial planner's membership in various associations. That's because a membership isn't a credential like that of certified financial planners and certified public accountants. The article notes that joining an association may only require "modest experience" even though there are education requirements.
- Be leery of a planner who only focuses on one portion of your financial portfolio, such as your household budget, life insurance coverage, or stocks and bonds. In such cases, the planner may only be focusing on areas that he's familiar with or handling products that his company has trained him to sell. A skilled planner will be able to examine your entire financial portfolio and give you customized advice on each aspect of it. A planner also should be able to advise you on how to adjust your financial plan to accommodate various life events, such as getting married or having children.
- The website of the Certified Financial Planner Board of Standards recommends that people interview several financial planners before choosing one. Ask all planners upfront how they get paid. Their costs may include an hourly rate or a flat fee. Find out if they're paid a percentage of any financial products they sell. Fee-only planners don't receive commissions on product sales, so they can be a good option for getting unbiased advice. In any case, you want a planner who operates ethically. The Certified Financial Planner Board of Standards has a tool on its website that consumers can use to check planners' credentials and find out whether their practices have prompted any disciplinary action against them.
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