How to Interview Financial Advisors

Not every financial planner is going to offer you what you need. Working with a financial planner requires making sure that you have a good fit. We've already gone over how to decide whether you need a financial planner and making sure you're on the same page with your spouse. Now you need to make sure that the financial planner sitting in front of you is the right person to work with.

Treat your first meeting with a financial planner as an interview

If you're going to pay a person to do a job for you, you need to make sure they can do that job successfully. Use the following questions to get a sense of the services this financial planner offers, compared to what you're looking for.

Learn about their business

  • How do you charge your clients for services?

  • What is your investment philosophy?

  • What do your financial plans usually look like?

  • What will my experience be as you create a financial plan for me?

  • What is your ideal client?

Learn about their qualifications

  • Are you a fiduciary?

A fiduciary is a person morally and legally bound to make financial decisions solely based on the interest of the client. A fiduciary will therefore make different decisions based on different clients and will not make decisions based on how much money he is going to get out of the deal.

  • What certifications do you have?

I have heard of "financial advisors" recommending investments to high net worth clients without understanding how it will affect their year-end taxes. Others have given basic retirement advice that is simply wrong. Avoiding these situations is easy if you ask for credentials.

CFP® is a designation meaning Certified Financial Planner™. CFP® professionals must pass a certification examination, which requires an understanding of the areas that affect your financial plan, and agree to abide by the board's code of ethics in regards to their clients. A CFP® gives clients the confidence that their financial planner is held to a certain standard.

CPA® is a Certified Public Accountant. In order to receive this designation, accounting practitioners are required not only to pass a test, but to demonstrate extensive experience in their field. CPAs provide insight into complex tax issues, such as stock options and how to reduce one’s overall tax liability.

CFA®designates Chartered Financial Analysts. Like the other designations above, it requires testing and extensive work in order to receive the designation of CFA®.  People who hold this designation are going to be trained in how to extensively evaluate individual stocks and investments.

There are many designations that have not been listed here. Unfortunately, many of those can be obtained via a quick test of knowledge or even a short seminar. While there are definitely capable advisors who do not have a CFP®, a CPA®, or a CFA®, these designations provide the best initial understanding of a financial planner's knowledge and background. Practitioners with these designations are knowledgeable on all aspects of your finances and how they will affect your life.

Choosing the right CFP® or financial planner for you

Give yourself time before your first meeting to prepare your questions. Is there anything specific you'd like to remember to ask? Review your questions after the meeting.  How did you feel about the answers this financial planner gave in response?

Preparing for your meeting gives you the confidence to choose the best possible advisor for your financial planning needs.