Financial Planning Checklist 2009 1/2
Checklist for Choosing a Financial Planner and Adviser
How do you sift through the hype when looking for a financial advisor? Are you better
served by a firm with a large advertising budget – will they do the best job helping you to
meet life’s financial goals? Advertisements talk about hopes and dreams, but ultimately
salespeople focus almost exclusively on selling an investment product or insurance.
Your adviser should analyze your current condition, make prudent recommendations and
provide support as you follow a well-defined path to your goals. With the growth of the
industry, and the loose-usage of terms like financial planning, Fee-Only, and financial
advisor AIKAPA believes that this checklist should help you begin your search for a
financial planner that is more likely to have your best interest at heart.
This list is does not include all that needs to be checked but it does provide a way to
initially filter financial advisors. The gray boxes indicated the preferred answers.
Can you trust them? Yes No
Is the individual you’ll work with a fiduciary? They should put your best
interest first and not sell you company products (i.e. insurance or investments).
Will they sign a fiduciary oath? – they should have one ready for you
Is the firm an independent registered investment advisor? – fewer conflicts
Do they have an agreement describing compensation and services that will
be provided in advance of the engagement?
Do they receive referral fees from attorneys, accountants, insurance
agents, mortgage agents, brokers, insurance or other professional?
What are their qualifications? Yes No
College Education?
Graduate Education?
Continuing Education courses in financial planning?
Do you have at least 3 years providing financial advice? – more is not always better
Is the person working with you a CFP or MSFS? These are the highest qualifications
for a financial planner but there are many other qualifications.
How will they and the firm be compensated? Yes No
Do they receive any commissions for products recommended?
This can be called Commission or Fee-Based or Fee Offset
Do they receive only an hourly or pre-agreed amount for all of the
services? (This is called Fixed Fee-Only)
Do they receive payment based on the assets they manage for you?
The term used is Fee-Only
What services are provided? Yes No
Goal setting and tracking
Cash Flow setup, management and follow-up/Budgeting
Tax planning
Investment review and planning
Financial Planning Checklist 2009 2/2
Risk review and planning
Insurance planning
Home purchase planning
Retirement planning
Educational planning
Estate planning
Personal disaster recovery planning
How do they provide services? Yes No
Written Analysis – a financial planning document
Provide planning recommendations
Provide recommendations and implementation
Provide coaching
Provide ongoing advice
What does YES or NO mean? We’ve grayed the best choices and below outlined our rationale.
Accountability is critical in financial planning. While many people profess to have the client’s best interest at heart, you need to be on
the lookout for conflict of interest that occurs when they choose a product from which they profit. We recommend that you require
your financial planner to sign a Fiduciary Oath. We also believe that advisors should be fee only and financial planners provide their
services on a fixed-fee only upfront agreement. We believe this is the best way for clients to be certain that the advice they receive is
free of profit based conflicts of interest.
Commission-based advisers should be able to explain how you will know that the recommendations received will be conflict free.
Some investment products charge 12b(1) and other fees which can also be called “trailers”. Anyone recommending these products is
not a fee-only advisor.
Prior to formalizing a relationship, you should always receive information on how the business is compensated and if they have
minimum fees. Minimum fees may not be in your best interest.
We believe that your advisor should have advanced education and know a great deal about topics such as investments, taxes, insurance
and other areas in which they provide advice. We believe that they should have continuing education to ensure that they don’t rely on
old approaches that are no longer viable. Unfortunately there are a large number of professional designations for financial advisors
that are available and we’ve concluded that the Certified Financial Planner (CFP) designation is the one that is most comprehensive
although none can replace the need for continuing education and concern for your specific financial situation.
Privacy laws severely limit an advisor’s ability to share client information and I would think that advisors who do share this
information are treading a very fine ethical and regulatory line. Only registered investment advisors owe a fiduciary duty under the
law to their clients. We are required to always act in the best interest of our clients and to make full and complete disclosure of all
materials, especially when the adviser’s interests may conflict with those of the client.
We wish you the very best success in your future. We believe that establishing a
financial path based on your goals
(through the financial planning process) can be a great way for
people to empower themselves, their families and their future. By choosing a Financial
Planner that has your best interest at heart you are taking this first important step.
Checklist is provided by AIKAPA
A California Register Investment Advisor
