A friend of mine was recently asking how to find a good financial planner.
He doesn’t want to work with a friend, which I respect.
So here’s a (totally biased) list of what I told him.
Financial Zen checks all of these boxes and much more, but if you can’t have Financial Zen here’s the minimum requirements I’d look for:
KNOCKOUT FACTORS (AKA MUST-HAVES)
1. FEE-ONLY, INDEPENDENT R.I.A. – Depending on how you measure there are 200,000 – 300,000 “financial advisors” in the U.S., but there are only ~15,000 Registered Investment Advisors (RIA).
RIA’s are fiduciaries and operate 100% outside of any product pushing you’ll find at banks, brokerages and insurance companies.
Fee-Only means they’re only paid by you, and not paid any form of commissions from 3rd parties. Everyone who’s part of NAPFA checks these boxes. Start here.
2. CERTIFIED FINANCIAL PLANNER – CFP or die!
3. FINANCIAL PLANNING FOCUSED – RIA’s (including CFP’s) fall into two categories – 1) investment advisors or 2) financial planners. The financial planners often ALSO offer investment management, however, the investment advisors RARELY offer robust financial planning.
4. EXPERIENCE – Stay away from newbies. Go for 10+ years of experience at a minimum. At that level, they’ve seen it all (or most of it anyway).
5. NO FAVORS – Don’t use your dad’s guy or anyone else who is doing a current client a favor by working with you. You’ll never get a proper amount of their attention.
OPTIONAL, BUT HIGHLY DESIRABLE
6. HIGH MEETING FREQUENCY – You won’t find another RIA that meets with you monthly like Financial Zen, so don’t bother looking. HOWEVER, there are “high touch” planners that will meet with you quarterly. The more meetings, the better.
7. SUBSCRIPTION FEE STRUCTURE – There are only about 1300 RIA’s that offer this (everyone on the XY Planning Network does). A subscription fee model better aligns your interests. AUM fees (a percentage fee based on the money they manage for you) encourage a focus on “gathering your assets” which can cloud a planner’s judgement.
8. RESULTS FOCUSED – Plenty of RIA’s will hand over your financial plan and recommendations and then tell you to call them if you need help. The GOOD ONES will actually help you execute. They’ll do everything they can do for you and then they’ll hold you accountable for the things you need to complete yourself.
If I weren’t me (but knew what I know), this is how I’d find…well…me.
