If you’re considering hiring a financial planner, make sure to raise these six critical questions:

1) What credentials or certifications do you have?

The financial industry is notorious for acronyms and abbreviations that can often be quite confusing, leaving you drowning in a big bowl of alphabet soup. The countless degrees and designations some financial professionals possess are no different. The one designation that must be on your radar is the CFP® or Certified Financial Planner™ designation. The CFP® is the gold standard for financial planners. CFP® certificants must complete rigorous education and testing in all applicable financial planning disciplines (i.e.: retirement, risk, estate, tax, investments) and fulfill annual continuing education requirements. While many other designations are much narrower in focus (such as specializing in retirement plans, investments or insurance) the CFP designation is comprehensive and takes into account the interrelatedness between disciplines. This is critical in advising clients about their entire situation, as so many financial decisions have multiple implications. You wouldn’t want someone without the proper certification as a nurse, nurse practitioner or doctor, to advise on your health. It shouldn’t be any different when it comes to your financial well-being.

2) Is your firm independent and are you a fiduciary?

Ideally, you want to work with an independent firm that is not associated with any bank, investment company or brokerage organization. Therefore, the firm won’t be restricted to use proprietary investment products, services or offerings that leave you wondering if the recommendations are really best for you or are merely the preferred choice for your advisor because it’s “their brand.”  You want to make sure that you’re working with a planner that is a fiduciary. A fiduciary is someone who is ethically bound and committed to maintaining a duty of loyalty and care to you, the client. In other words, your best interests should always come first, at all times.

3) How are you compensated?

There are numerous compensation models in the financial planning industry, some more objective than others. Some advisory firms earn compensation solely on commissions from selling investment products, insurance and annuity contracts. When an advisor’s only way of getting paid is to sell, then every recommendation they make may involve you purchasing a product, which may or may not be in your best interest. Conversely, a fee-only advisor doesn’t earn any commissions, doesn’t sell any products and doesn’t earn fees either directly or indirectly from investments implemented in their clients’ portfolios. Instead, fee-only firms quote a specific fee for services rendered (financial planning, investment management, tax planning, etc.), hence the name “fee-only”  which is the only compensation they ever receive, regardless of the advice given, investments chosen or financial plan implemented.

4) What is your policy on client communication and responsiveness?

Nothing is more frustrating than working with someone who is unresponsive or incredibly difficult to connect with. This doesn’t mean that emails or phone messages must be returned within mere minutes, but it does mean that it shouldn’t take you several days to hear back from your planner. Some of the best planners and advisory firms actually build their culture upon exceptional client service and responsiveness. A typical best-in-class communication policy is for post-meeting communication to be sent within 48 business hours of a meeting and responses to email and telephone messages within 24 business hours. Additionally, a responsive planning firm will always have a live person answer the phone when you call – no prompts or automated answering services. If you leave an email or phone message for your planner that requires some time for them to research and get back to you, you should expect an acknowledgement that your inquiry was received, is being researched and that you can expect an answer shortly, not just silence leaving you wondering if your note has been received.

5) How often will we meet and how often will my financial plan be updated?

Unfortunately, most firms fixate on a fixed or static number of meetings such as semi-annual or quarterly meetings. While some structure is better than none, these static timeframes are meaningless as it relates to your particular goals and changing circumstances. Life doesn’t happen in quarters so why should time with your planner? You ideally want to work with a planner who understands this and who desires to meet with you as needed. Of course, your planner should also establish a minimum frequency to review and update your entire financial planning situation (such as at least once per year) but should also express that you each should keep communication open and have phone calls, WebEx sessions and face-to-face meetings on an as-needed basis when there are developments in your goals and circumstances such as a job change, new child or a desire to re-prioritize your objectives.

6)  Is anyone listening?

This last one isn’t a question you should be asking; instead, it’s a reminder to pay attention to the questions your potential planner is asking you. Are you asked about your money, investments or net worth before being asked about your personal life, family, goals, fears, concerns, or values? It’s important to remember that you are the client, not your portfolio. A good planner will designate time for learning about you, discovering what’s important and listening with the intent to understand rather than to merely respond. Sure, the monetary and quantitative elements are important, but they shouldn’t take priority over the relationship itself.