Financial Planner

A financial planner is a qualified investment professional who helps individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting up a program to help the client meet those goals. Financial planners specialize in tax planning, asset allocation, risk management, retirement and/or estate planning.

A financial planner can be designated a Registered Financial Planner by the Registered Financial Planner Institute (RFPI). A financial planner can also carry the Certified Financial Planner (CFP) designation if he or she is compliant with the Certified Financial Planner Board of Standards’ initial and ongoing requirements, which include examinations in financial topics like tax and estate planning.  

CFPs explicitly providing financial planning services to clients are fiduciaries. This means they are legally obligated to act in the client’s best interests and they can’t personally benefit from the management of client assets. They are expected to manage these assets for the client’s benefit rather than their own.

Even though the Department of Labor (DOL)’s Conflict of Interest Final Rule is expected to meet its final compliance deadline by January 1, 2019, the rule still imposes a fiduciary standard on financial planners making recommendations for retirement plans including 401(k)s and individual retirement accounts (IRAs).

Fiduciary specifics can vary. For example, registered investment advisors (RIA)s are fiduciaries under the Investment Advisors Act of 1940. They are regulated by the Securities Exchange Commission (SEC) or state securities regulators.

All RIAs are fee-only advisors, meaning they can’t work off commission or sell clients investment products that aren’t in the clients’ best interests. Financial planners don’t have to be RIAs to work under this business model. Fee-only financial planners generally make their money as an hourly rate, a annual fixed retainer or as a percentage of the investment assets they manage on behalf of their clients. They also have a fiduciary duty to their clients over any broker or dealer.

Financial planners working off commission generally earn money as payments from companies whose investment products they recommend. They can also earn money by opening accounts for clients.

You should interview at least three financial planners before choosing the one that's right for you. Be sure to get the answers to the following questions:

1. What are your credentials?
2. Can you give me references?
3. What do you charge?
4. What is your area of expertise?
5. Will you act as my fiduciary?
6. What services can I expect?
7. How will we settle disputes?

To check the status of a CFP and for a guide on choosing the right advisor to work with, visit the CFP Board of Standards website.

Several associations can also help you find a member in your area including the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors .