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Maryland Securities Division - Investor Education

How to Choose a Financial Planner

1. Interview and ask questions to find the right financial planner.

  • What is the planner's education and experience? Ask for and check references.
  • Determine if the planner has experience in areas that serve your interests and needs.
    Does the planner offer services that fit your income bracket and investment philosophy?
  • Does the planner offer a wide range of investment choices, or only those for which the planner will receive a fee or commission?
  • Ask how the planner will be paid, and how payment will be made. Payment methods include flat fees, performance based fees (a fee based on the increase in the value of your account), hourly rates, commissions, or a combination of these methods.
  • Ask for a copy of the planner's disclosure document, a sample plan, and a sample contract.
  • See the Financial Adviser Interview Checklist. We developed this checklist to help you choose a financial planner. It may be used during an interview or sent to a financial planner as part of a preliminary screening.
  • Call The Securities Division to inquire about your planner's status and to check disciplinary history.

2. Do your homework; determine your financial status and objectives. Be prepared to talk about your specific financial goals.

  • Gather your data: income, savings, real estate, taxes, wills, etc.
  • Identify your goals and objectives as an individual, a couple, a family.
  • Is the planner interested in clarifying a particular problem you want to resolve or helping you achieve a particular goal? Some people may need a plan for only a segment of their finances. Make sure the planner understands your needs.
  • Give this information to your planner in writing, and keep a copy of this and all other pertinent documents for your records.

3. If you need on-going planning and advisory services, be certain that the planner will provide:

  • A clearly-written plan that sets forth goals, alternatives and risks.
  • Specific suggestions to improve your cash management.
  • Projections of the impact of shifts in interest or inflation, and a plan to generate cash in case of emergency.
  • Monthly or regular written summaries of transactions and the status of your account or plan, documentation of recommendations, and periodic review of your plan's status and progress.
  • Access to other sources of advice from lawyers, bankers, brokers, accountants, etc. (Check references here, too.)

4. Make sure you can understand account and plan statements.

  • Understanding your account and plan statements is key to controlling your investments. Check the statements over carefully as soon as you receive them. Familiarize yourself with the format, terms and codes used by your adviser.
  • If you ever find information in your account or plan statement that you do not understand, contact your adviser immediately and get a satisfactory explanation.

5. You can check with industry groups that offer help finding qualified financial planners.

  • The Institute of Certified Financial Planners will provide a list of up to three planners in your area, along with a brochure to help guide you through the selection process. All suggested planners have achieved the CFP credential. Call 1-800-282-7526.
  • The International Association for Financial Planning (the "IAFP") will provide a list of five planners in your area, along with two brochures about how to select a financial planner. To be in this referral program, planners must affirm that they meet all regulatory requirements applicable to their practice, and agree to abide by the IAFP's Code of Ethics. Call 1-800-945-IAFP.
  • The National Association of Personal Financial Advisers, whose members must be fee-only planners ( i.e., planners who are not compensated through commissions), will provide a list of members from your state along with a financial planner interview form and a brochure that helps illustrate how and how much the planner and firm will be compensated. Call 1-888-FEE ONLY.
  • The American Institute of Certified Public Accountants will provide the names of members in your area who have earned its Personal Financial Specialist (PFS) designation. The PFS designation is awarded to CPAs who have several years of financial planning experience, maintain a continuing education schedule, and pass a qualifying exam. Call 1-800-862-4272.

Remember to do your own homework, and call us to inquire about your planner's status.

Call us, we're here to help!
The Maryland Securities Division
(410) 576-6360

 
 

Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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