How To Select and Work with a Financial Planner

If dinner-time talk is focused on whether you should cash out stock options, reallocate IRA funds, or save for your child's education, it may be time to get some financial planning help. Yet, if you're like many people, finding the right financial planner -- and one who fits within your budget -- sometimes seems more daunting than the task of doing your own financial planning. To help make your search easier, the California Society of Certified Public Accountants (CalCPA) provides the following advice.

Have a Vision
Outline your own short- and long-term financial goals before you meet with any prospective planners. Financial planners can help you make insurance decisions, plan for retirement, distribute your estate, and even decide how to use funds received in a divorce settlement. But before you can have a meaningful discussion with a planner, you need to know where you want to end up. In other words, in what financial position would you like to be in five, ten, or even twenty years from now? What do you see as some of the impediments to achieving this position? Are you anticipating any major lifestyle changes, such as marriage, birth of a child or even a new job, that will impact your personal financial situation? Answer these questions for yourself before you begin your search.

Assess Your Financial Skills
It's also a good idea to assess your own financial capabilities and characteristics. For example, do you like to manage your own finances or is that just an annoying chore? How knowledgeable are you about some of the financial products on the market today? Being honest with yourself about your own financial capabilities and knowledge will guide you in determining the level of financial help you need.

Know What You Can and Can't Expect
Don't think that a financial planner will make you a millionaire overnight. Nor can a planner change your financial habits -- that's up to you. But a planner can work with you to better manage your cash flow, devise an investment strategy, address your insurance needs, and develop strategies for saving for college and retirement.

Identifying Prospective Planners
One of the best ways to locate a financial planner is to obtain referrals from friends, family members, or professionals with whom you work. Get referrals from people like yourself and ask whether they have actually worked with the financial planner they are recommending to you.

It is important that you meet with several people, not just one, to make your decision. Most financial planners will offer you a free consultation. Prepare a list of questions prior to the meeting. For example, you'll want to find out how the planner is compensated, how long he or she has been in business, the typical net worth of their clients, and whether references can be provided. Keep in mind that some planners accept commissions from other service providers. Ask the planner to be forthright about those vendors or providers with whom they have such arrangements.

Personal Financial Specialists
It's up to you to assess the individual's capabilities and know-how. You can ask about the planner's credentials. CPAs who have earned the Personal Financial Specialist (PFS) accreditation from the American Institute of Certified Public Accountants (AICPA) and/or a Certificate in Educational Achievement (CEA) in financial planning from the California CPA Education Foundation are particularly well suited to provide financial planning advice. Those who are so accredited or possess a certificate from a financial planning institute have met specific requirements that are designed to ensure that they have the experience and education needed to provide competent financial planning services. Some CPAs and other financial planners are also registered investment advisers, meaning that they have demonstrated knowledge of securities laws and comply with applicable government regulations.

Ultimately, it will come down to trust. Do you feel you can rely on this particular planner? Do you have a good rapport?

CPAs offer one final word of caution: beware of any financial adviser who suggests you turn over large sums of money which he or she will invest on your behalf. It's wisest to maintain control of your money and thoroughly research any investment vehicle before tying up your hard-earned savings.

To find a personal financial planner that meets your needs, use CalCPA's Find a CPA feature.