Do Your Homework Before Hiring a Financial Professional

Paul Fain, CFP®

So you need financial advice. Where will you get it? Often a specific event or a long-term need will trigger the search for professional guidance. Furthermore, you may not have the expertise, the time or the desire to research, plan or manage certain aspects of your financial life. In today’s chaotic world, you may benefit from an objective, third-party perspective on what are often emotional, difficult decisions.

A financial professional can help you navigate your financial life, make sure you stay focused and follow through. For example, perhaps you are expecting a new baby and need to review your options for life insurance, or want assistance reviewing your investment portfolio’s asset allocation, handling an inheritance or dealing with consumer debt. Perhaps you want to get all your financial ducks in a row with a more comprehensive view of your financial and personal circumstances. This would include help setting realistic financial and personal goals; assessing your financial health by examining your assets, liabilities, income, insurance, taxes, investments and estate plan; and developing a comprehensive plan to meet your financial goals by identifying opportunities and building on strengths.

In hiring a financial professional, words matter. Do you need a financial planner or a financial adviser? Financial advisers can come from a variety of backgrounds. They could be brokers or investment advisers, insurance agents or practicing accountants. If they sell products, their recommendations typically will correspond with the products or services they sell. You’ll want to make certain you fully understand which areas of your financial life a particular adviser can — and cannot — help with before you hire that person.

Last year, the Financial Planning Association announced a new multi-year goal to pursue legal recognition for the title of “financial planner” to help consumers understand who is qualified to provide financial planning advice and to raise standards for the financial planning profession by tying competency and ethics standards directly to the determination of who can use the title in the first place. Under this approach, marketing oneself as a financial planner would trigger a fiduciary standard of care.

Bias alert: In 1988, my late father, P. Kemp Fain Jr., a certified financial planner who is considered a pioneer in the financial planning profession, wrote a seminal white paper titled “One Profession, One Designation.” It was a call to action for financial planners to rally around a common training program rooted in education, experience, examination, and a code of ethics. Ultimately, writes Michael Kitces, a widely respected industry author and speaker, “the hallmark of a recognized profession is having a single clear pathway to determine ‘professional’ status, and that a key element of that is to have a title, license, or other marks to connote to the public who has achieved that professional status.”

So if you need financial advice, either event-driven or comprehensive, situational or ongoing, consider interviewing several certified financial planner practitioners. Find a CFP at www.letsmakeaplan.org (the CFP Board of Standards) or www.plannersearch.org (the Financial Planning Association).

Happy planning!

This article originally appeared in the Knoxville News Sentinel online February 24, 2023.