How to choose a financial planner, a step-by-step guide

Many people want to know how to choose a financial planner, and for good reason. There are few people you put more trust in than a financial planner. This important relationship has large and lasting repercussions for your money, so you should take extreme care when choosing a financial adviser or financial planner.

While you should always look into certifications and credentials, there is a lot more to a financial planning relationship than making sure your planner has passed a test.

You also want to make sure the financial planner aligns with your goals and requirements on pricing, investment strategy, and is someone you enjoy working with.

If you want to know how to choose a financial adviser, follow this guide for more details to consider.

How to choose a financial planner

A financial planner will likely have access to all of your financial information, if not direct access or control over your financial accounts. With such a deep relationship, you should do online research to choose some top financial planners in your area and then interview at least two or three to pick a favorite.

SmartAsset’s free tool can help you find a qualified financial adviser in your area. Find your match today »

Planners can vary widely in what they charge, how they work, and what they think is best for your money in your situation. These are some of the most important questions and criteria to keep in mind as you work through how to choose a financial planner.

How do they charge?

The first question to ask upfront is what you’ll pay. If a financial adviser’s pricing doesn’t align with your requirements, that’s a deal-breaker.

Many financial planners charge based on the dollar value of assets under management. Others charge a predictable, flat fee for any planning and advising services.

What’s their investment style?

A good financial planner will get a sense of your risk tolerance and investment goals and build a portfolio to suit your needs. But that ideal portfolio may look different to different planners. Some might like a passive, buy and hold approach. Others prefer an active investment style.

Pick a financial planner who matches your style, don’t change your style to fit your planner.

Are there any conflicts of interest?

Some financial planners are paid kickback commissions when they sell specific products or funnel your funds into specific mutual funds. This is absolutely a conflict of interest. I would never pick a financial planner where this conflict exists under any circumstances.

You’ll want to look for a financial planner who is a fiduciary, meaning they have an obligation to act always and solely in your best interest.

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Do they work with clients like you?

If you find a financial planner who specializes in finances for Baby Boomers, a millennial might not think that specific planner is a good fit. It doesn’t mean they are bad at their job, they just might not be right for you.

Make sure your new financial planner has experience helping people in your situation handle similar challenges and goals.

How have they performed in the past?

Past performance is no guarantee of future results, but it can be a good indicator of what to expect. If an adviser’s clients consistently underperform against market benchmarks, they may not be worth the cost.

How do they communicate?

If you like email and text messages, don’t hire a financial planner who only wants to meet by phone. And if you love the phone, you might not want a planner who prefers to send everything digitally.

Again, there is no right or wrong. It’s about what you prefer and finding the right match.

Learning how to choose a financial planner is kind of like dating. You may have to sift through many fish before finding a few that could be a good fit.

After interviewing, or dating, a few, you know enough to make a longer-term decision. But whatever you do, don’t rush and pick a financial planner unless you’re sure they are the right person for you.

Ready to talk to a few financial planners and find the right one for you? SmartAsset’s free tool can connect you to qualified advisers in your area »

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