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How To Choose A Certified Financial Planner

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If hiring a certified financial planner is something you’ve been considering, here’s our reference guide to help you decide what level of financial planning assistance you may need.

Financial planning in Latinx or first-generation families can typically involve: a pen, a notebook, a random envelope with lots of dollar amounts, or a mattress. At worse, it may involve a payday loan. However, there may come a time where you need professional assistance as you progress on your wealth building journey. 

Financial advisors are a board term for a variety of financial professionals who can support people in their money journeys at all stages. From budgeting, to tax planning, to income streamlining–there are different financial advisors for all kinds of situations and budgets. Some are passive, like robo-advisors, others are active, like certified financial planners (CFP), registered investment advisors (RIA), and chartered financial analysts (CFA).

A certified financial planner (CFP) is one type of financial advisor. Financial planners with the CFP credential have gone through testing carried out by the Certified Financial Planner Board of Standards and have extensive education, training in standards and ethics, and are up-to-date on all things personal finance. Visit this link to verify a CFP’s working credential.

A CFP is the financial planner that covers a little bit of everything: cash flow streamlining; debt pay-off journeys; planning for big purchases; holistic budgeting; retirement savings plans; investment portfolio allocation; and other aspects of your key financial goals.

Hiring a CFP requires a financial investment, as they have higher fees than a robo-advisor. Some will charge anywhere between $150-300 an hour, while others offer one-time fees for a meeting and financial plan. When looking for a CFP, you want to ensure they are a fiduciary, meaning they are legally bound to act in your best interest. You also want to find someone that operates under a fee-only policy, which means you will pay an up-front fee for their time and services, rather than fees on your investments, insurance policies, or companies. This will ensure your CFP provides you with options that are for your benefit, not the commission.

An Important Question To Ask Yourself Before Hiring a CFP

Where are you on your wealth building journey?

Scenario 1:

  • I am in my 20s with a high-risk tolerance and at the start of my finance journey
  •  All of my questions are around a single financial topic (such as real estate or taxes)
  • I am on a tight budget

If any of these sound like your situation, you might not need a CFP. If you do not want to take an active approach to your investment portfolio, for example, getting a target-date fund or a robo-advisor will be better suited. Or if all of your questions are around, say, real estate, you might better benefit from a real estate attorney.

Scenario 2

  • I have high debt but a stable income, but I need help formulating a plan to tackle my debt
  • I am facing a big financial change in my life, such as purchasing a home
  • I have income coming in from multiple sources and want to organize them
  • My financial goals are all-encompassing, covering areas such as business ownership, retirement, and budgeting. They are not confined to only one area.

If two or more of these apply to you, you may benefit from a CFP.

How to Find a Certified Financial Planner

If you’ve decided that you want a CFP’s support, start by asking people in your circles for any referrals. For example, if you are a small business owner, ask a fellow small business owner if there is someone they work with. Doing this will increase your chances of finding a CFP that may specialize in one of your strongest areas of focus or that aligns with your overall financial style.

Another option is to visit Let’s Make A Plan to search up by area. While many CFPs now offer remote services, a relationship with a CFP can be a long-term one, so you will want to consider if you want to give yourself the option of future in-person meetings.

Once you have built a list of anywhere between 3-5 potential CFPs, it is time to schedule consultation calls. Make sure to ask the following questions:

Questions to Ask a Certified Financial Planner Before Hiring Them

1.       Are you a certified financial planner?

Remember, we want the CFP certification!

2.       Are you a fiduciary?

This means they are legally bound to act in your individual best interests

3.       How do you get paid?

We want to find out about their fees. Remember, you are looking for someone that is “fee-only” not “commission-based.”

4.       What are the different plans you offer?

Some CFPs operate under an hourly basis only, some will offer an initial meeting plus a detailed financial plan, while others offer a relationship, with evolving financial plans and periodic check-ins. This question is key to ensure you are both on the same page.

5.       What do you consider when creating someone’s investment portfolio allocation?

If you are consulting your CFP for investment-related questions, this question is key to ensure your CFP is open to approaches like yours. Remember, a CFP will not tell you what to buy, but rather how to optimize your portfolio to best serve your financial goals.

6.         What is your money story?

As people of color and first-generation wealth-builders, sometimes it can be helpful to build a relationship with someone who can at least be empathetic to our unique financial backgrounds. You want to ensure you have a relationship with your CFP that promotes honesty and transparency about your financial history. 

The most important part of the CFP search process is to take your time. This is a big investment, and you do not want to rush it. Make sure to have a pool of options, ask a lot of questions, and get the answers you are looking for before committing.

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Meet Jannese

Jannese Torres-Rodriguez is a award-winning Latina Money Expert, Educator, Speaker, Writer and Business Coach. She became an accidental entrepreneur after a job loss led her to create a successful Latin food blog, Delish D’Lites. Now, she helps her clients and listeners build successful online businesses that allow them to pursue financial independence and freedom.

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One Response

  1. I liked it when you shared that it is great to have a pool of options by asking a lot of questions, and getting the answers you are looking for before committing to a reliable financial planner. My uncle just mentioned the other day that he is planning to plan for his future as he wants to have a better financial state. I will suggest to him work with a reliable financial planner that is competent.

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