3 Things You Should Know About Hiring A Financial Planner
Knowing how to correctly handle money requires advanced skills and training, which is why it makes sense to hire a financial planner to assist you with getting your financial affairs in order.
#1: How a Financial Planner Makes Money
Financial planners do not give away their advice for free. If you want to work with a financial planner, expect to pay for their assistance.
There are two different ways most financial planners structure payments; either fee-based or commission based. Commission-based financial planners charge you a commission based on a percentage of each asset or transaction they make for you. With fee-based financial planning, the fees may be structured one of two ways: you may be charged an hourly rate for their work, or you may be charged a specific rate for each transaction or service they provide for you.
The best payment structure for you depends on what you need to work on with your financial planner, what your goals are, and what type of budget you have.
#2: Type of Training a Financial Planner Has
Financial planners have a wide variety of backgrounds and training they draw upon. When you hire a financial planner, you should always find out what type of training they have.
Make sure your financial planner has one of the three most popular financial advisor licenses:
- Registered Investment Advisor (RIA)
- Certified Financial Planner (CFP)
- Chartered Financial Consultant (ChFC)
The three licenses above do not all signify the same thing. Someone who has a CFP license has studied over a hundred different financial topics, has a fiduciary responsibility, and a code of ethics they follow. Someone who has a ChFC has extensive training in financial subjects and has passed a rigorous exam.
An RIA certification does not signify any specific training; it signifies that the individual or company is registered with the security agency in your state.
You want to hire someone who either has a CFP or a ChFC, and has an RIA.
#3: How A Financial Planner Can Help You
A financial planner can help you out in a variety of different ways. They can help you make important decisions that impact your overall financial health. They can help you set up retirement accounts and trust funds. They can help you determine what type of financial products you should invest in. They can help you with estate planning. Overall, a financial planner can help you get your finances in order and ensure that your money is working for you.