The number one designation in the financial planning industry is CFP® (Certified Financial Planner™). This designation requires a substantial amount of study and the successful completion of a proctored examination. There are also continuing education requirements to retain the CFP® and practitioners have to adhere to a Certified Financial Planner™ Code of Ethics.
Does that mean you can automatically trust anyone who claims to be a Certified Financial Planner™? Absolutely not, you still have to do your homework to make sure the CFP® is a competent ethical professional. Following are a few tips that will help evaluate the quality of the CFP® professional.
Step one is to make sure the planner has a current CFP® designation. This is easy to do. Go online and go to the website of the organization that sponsors the designation. Input the planner’s name to make sure he is a current holder of this designation.
Watch-out for designations that resemble CFP®. These fake designations are designed to trick you into believing reps are legitimate financial planners, when they are not. It stands to reason you should avoid anyone who uses deception to sell you planning, investment, and insurance services.
Years of Experience
It does not take that many years to acquire a CFP® designation. So it pays to ask how many years the representative has been providing financial advice and services. Or, more importantly, how many years of planning experience do they have. You may find a representative who has ten years of experience selling mutual funds and six months providing planning services. For your information, there is no way to validate planning experience, but it still pays to ask.
Serious planners belong to the Financial Planning Association or the National Association of Personal Financial Advisors. This means they are subject to the associations’ continuing education requirements and code of ethics.
High quality financial planners are willing to document the information you are seeking because they have nothing to hide. Low quality planners and fake planners are going to resist documentation because they have a lot to hide. So one way to determine quality is to ask for documentation and exclude or terminate any planner who refuses to provide the information you are seeking in writing.