Choosing a Certified Financial Planner: Factors to Consider

Article Summary

This article provides an overview of Certified Financial Planners (CFPs) and explains why they are the most valuable financial advisors for family caregivers of aging loved ones.

Key takeaways:

1. CFPs are held to the highest standards of education and experience and are legally bound to act in their client’s best interest at all times.
2. CFPs can offer advice in a wide range of areas, including paying for long term care, creating a budget, investment planning, estate planning, tax planning, insurance planning, and debt management.
3. CFPs typically charge a percentage of assets under management, a commission, a fixed fee by service, an hourly rate, or a retainer/subscription fee.

What Kind of Financial Planner is Most Valuable to a Family Caregiver to an Aging Loved One?

With all the different types of financial planners out there, it can seem confusing, but the bottom line is pretty simple. As a family caregiver looking for a financial advisor, you should opt for a Certified Financial Planner (CFP).

• The main exception to this rule of thumb is that if you only need tax-related advice a Certifed Public Accountant (CPA) – the go-to for tax preparation and advice – is a fine alternative.

Why a CFP? They are extremely capable and trustworthy. In order to earn their CFP certification, they are held to the highest standards of education and experience. They’re also bound by a strict code of ethical behavior and have a fiduciary duty, meaning they’re legally bound to act in their client’s best interest at all times.

• There are other types of certified financial advisors who may be similarly capable and trustworthy but they tend to cater toward businesses rather than individuals.

CFPs help older adults and their family caregivers plan for financial security in an uncertain future. They’ll look at your entire financial life, help you set short and long-term goals, and offer valuable guidance on how to meet them.

CFPs can offer advice in a wide range of areas.

• Paying for long term care
• Creating a budget and managing finances
• Investment planning – where to invest and how to structure dividend payments wisely
• Estate planning – develop strategies for transferring property, gifting, or leaving legacies behind for loved ones
• Tax planning and strategies
• Insurance planning and risk management – how much and what kinds of insurance do you really need?
• Debt management

Can I Afford a Certified Financial Planner?

There are several common ways Certified Financial Planners structure their fees. Each individual CFP may offer one or more of these methods.

• Assets under management: Your fee is determined by a percentage of the assets the CFP manages. For example, 1% of assets under management for $400,000 would total $4,000 per year. Ask what percentage is charged and whether there’s a minimum.
• Commission: Some CFPs earn commissions when they sell stocks or other financial products. Even though they technically can do this as long as it doesn’t conflict with your best interest, it just opens the door to a messier experience, so it’s often recommended to avoid any commission-based advisor. Instead, opt for “fee-only” – not “fee-based” –  advisors when possible.
• Fixed fees by service: A flat fee for a specific service, such as a one-time comprehensive financial plan. The cost of a comprehensive financial plan with a Certified Financial Planner averages around $1800-$2500.
• Hourly rate: The average hourly rate for CFPs is around $250. An hourly rate can work well for one-time services.
  Retainer / Subscription fee: Pay a monthly or quarterly fee to retain the CFP’s services on an ongoing basis. The average annual cost for retainer services is around $4,000.

How Do I Find a Certified Financial Planner?

While CFPs have comprehensive training across 72 relevant financial areas, they do specialize within them, so look for one right for your needs.

• Locate a few potential CFPs
  • Review Olera’s suggested CFP profiles in your area (available on your Olera dashboard)
  • Find a CFP through the Certified Financial Planner Board. You can filter by criteria such as:
    • Location
    • Planning services offered (retirement, insurance, estate, tax, long-term care, social security, eldercare, health care, etc.)
    • Client focus (retirees, intergenerational families, widows/widowers, special needs individuals, veterans, LGBTQ couples, etc)
• Contact several potential CFPs and ask a few questions to gain an understanding of their services. Note how comfortable you feel talking with each potential CFP. Do you feel respected and trusting or rushed, awkward or confused?
• Are you fee-only or do you earn any commissions? Do you have any potential conflicts of interest?
• What do you charge? How do you structure your fees?
• What’s your approach to financial planning? How and when will we meet or communicate? Will I be able to ask questions via phone or email? Will I be working with you directly or with a larger team?
• Have you ever been publicly disciplined?
• Check the certification status of any potential CFP at the CFP Board.
• Check for any records of public discipline at any of the following sources:
• Verify a CFP® Professional
• Investment Adviser Public Disclosure (IAPD) BrokerCheck

Author Bio

Laura Herman is an elder and dementia care professional who advocates for better senior care in America. This article has been reviewed by TJ Falohun, co-founder and CEO of Olera. He is a trained biomedical engineer and writes about the cost of healthcare in America for seniors.

Sources

Certified Financial Planner (CFP): What You Need to Know - NerdWallet

10 Questions to Ask Your Financial Advisor | CFP

Registered Program Content

Paying Your Advisor | CFP