Fee Only Financial Planning is the Best Choice for Most Investors

Having the financial resources to enjoy retirement without making a plan isn’t likely to happen. This is also true when preparing for college educations for children. Good financial planning safeguards the future of everyone in the family.

A qualified financial planner helps you set financial priorities and goals and recommends a plan to get you there. This plan can include investment allocations and recommendations on insurance, taxes, and estate planning. You’ll learn how to make the most of what you have both for today’s and tomorrow’s needs.

Finding a Qualified Financial Planner

Anyone can say they’re a financial planner. You need to make sure financial advice is coming from someone qualified to offer it.

Credentials. Look for a financial planner who has proven a certain level of knowledge of financial planning and investing. There are many designations used by financial planners and some mean nothing. Look up any claimed designation to learn what the planner had to do in order to receive it. Meaningful designations include:

  • CFA—chartered financial analyst
  • CFP—certified financial planner
  • PFS—personal financial specialist

References. Ask knowledgeable investors for recommendations.

Financial Planning Association.: Search their database for financial planners with a CFP.

CFP Board of Standards. Verify the planner’s background and status.

How Financial Planners Get Paid

There are normally three ways in which financial planners get paid.

  • Fee Only Financial Planning. In most cases, Fee Only Financial Planning is the way to go. The planner is only paid for their advice. He or she does not earn commissions by selling you specific financial products such as mutual funds or life insurance.
  • Fee-Based Planners. The financial planner receives fees for advice and from commissions received by selling you specific financial products.
  • Commission-Based Planners. Their income comes solely from selling you financial products.

If a financial planner is earning part or all of their income from commissions, this makes it far less likely that you would receive unbiased and objective advice. This is especially true if a planner’s income is solely derived from commissions. The planner will have no vested interest in advising you about financial products they wouldn’t receive a commission from.

Choosing a financial planner who receives no commissions offers the best guarantee of getting the honest advice you need. Do your research to find a qualified financial planner and sit down for a serious discussion of your future. Without a plan, your dreams won’t come true.