How To Find An Ideal Financial Planner

A financial planner is a person who gives advice to the people on various financial issues through proper planning. It includes cash flow management, investment planning, retirement planning, education planning, risk planning, estate planning, business succession planning, tax planning. The work doing by him is known as personal financial planning. 

The main reason of people enlist the financial planner is the complexity of knowing how to perform activities like

1) providing direction and meaning to various financial decisions
2) understand how each financial activities affects the other financial areas
3) adapt more easily to life changes

The main duties of the financial planner is to determining the financial goal of a person, life priorities and purposes in life of him and prepare a balanced and realistic plan to meet those goals. Before prepare the plan the financial planner need to understand his resources, risk profile and current life style. It also needs to cover all the areas of the client’s financial needs. 

The way in which the financial planner is compensated will directly affect the advice that he gives to the clients. Most of the planners earn their income by selling mutual funds, insurance, annuities and other financial products to implement their recommendations. The planners sometimes face a conflict of interest and will. They compel clients to by the products in which they have financial interest.

The commission based financial planning is considered as amore affordable one. This is because the commission based financial planners charge a low fee or no for their advice. When they sell products to implement their recommendations, a percentage of money we spend goes to the planner as a commission. Therefore you need to include the cost of implementation while assessing the cost of financial planning. 

Here in this case the increase in the implementation cost is not only in the price you pay for the commission based planning but also in the form of poor advice. When the financial planner earns more money as a financial salesperson, the planning becomes window dressing to attract clients for the real money making business of selling products. 

If you are looking for an objective financial advice, a fee-only financial planner is probably suitable. This type of planners work on fixed compensations which are provided only by the clients. This type of compensation could again vary from case to case and people to people. It could be based on an hourly fee or a flat project fees. They could also charge a certain percentage of the total case value.

The compensation is paid only by the clients to the fee-only financial planners. Therefore, there are no hidden third party relationship and no divided loyalties. However the fee only approach is also subject to some conflicts more than any other form of financial advices. 

Fee-and-commission based financial planning is another form financial planning. In this case a financial planner earns a fee for developing a financial plan and earns a commission for selling the products to implement that plan. They are more objective than commission only planner and more affordable than fee-only planners.