- Ask retired colleagues and friends for recommendations
- Go to an institution you trust, or check resources for independent financial planners
- Check candidates' credentials, certifications and professional memberships
- Research candidates' ratings from Dalbar
- Interview several candidates
- Choose someone who "tells it like it is," and who listens well
Finding a good financial planner can be tricky. You need someone with impeccable credentials, but you also need someone you can get along with and trust, who has expertise in your particular situation.
You can ask friends and acquaintances for references, but remember that people's needs and personalities vary. Also, you want to be sure to find a financial planner with experience managing assets after retirement. Consider seeking recommendations from former colleagues or other acquaintances who have been retired for a few years and are happy with their advisors.
If you can't find an individual you trust, find a firm you trust and ask names of several advisors with experience helping retired people manage their money.
Once you find several candidates who interest you, check their credentials, certifications, and membership in professional associations. Mark Willis, vice president of financial education with Aetna Financial Services, advises you to make sure they have "Certified Financial Planner" credentials from the Financial Planning Association.
He also urges checking for a rating from Dalbar, a Boston-based independent research firm serving the financial services industry. In 1997, Dalbar started issuing an annual directory of financial planners, which rates planners on four categories: investment performance, customer trust levels, satisfaction with service and overall opinion. Financial planners pay Dalbar a $500 fee to be listed in the directory. Dalbar rates advisors according to their work history, number of clients, regulatory record and client surveys. Currently, 1,500 advisors are listed in the directory, which is available online free-of-charge.
If you want to find an advisor who is independent of the big brokerage firms, you can check the Consultant Directory, which lists 400 independent consultants. It's published by Charlottesville, Va.-based Money Market Directories Inc., a division of Standard & Poor's. (800-446-2810). Another source is the Institute of Certified Financial Planners, which has a referral service for consumers.
Interview several candidates and check their references. Most of all, pay attention to how they talk to you. The advisor should tell you what you need to hear, not what you want to hear.
See how well they listen, too. Ultimately, the key to a successful relationship will be communication. "You have to be very clear, as a client, how you want the money to behave and what you want it to do for you," said Michelle Anderson, vice president of personal investment counselors with First Union Brokerage Services Inc.
Finally, remember that while a consultant will do most of the heavy lifting in creating a plan, that doesn't absolve you of the responsibility to know what's going on. The consultant works for you. Make sure he or she explains everything clearly and simply.
"I recommend to individuals when they're getting help, don't put themselves fully in someone else's hands. Do reading and studying on your own, so you have clues as to whether the advice makes sense," said Ted Benna, the benefits consultant who created the first 401(k) plan.