Much like a personal trainer, a financial planner is a resource for information, a good coach, and a person to hold you accountable when you drift away from your stated goals. Add in the peace of mind gained by having a competent and reliable source regarding taxes, investments, estate planning, retirement planning, and more it is easy to understand why so many people choose to work with a financial planner.

There are two general types of financial professionals: commission-paid brokers and registered investment advisors. Generally, brokers are registered with the Securities and Exchange Commission (SEC) and overseen by the Financial Industry Regulatory Authority. Brokers sell financial “products” that pay a commission. These commissions are often not clearly disclosed but rest assured you, the client, is paying for them.

Financial professionals can also be registered as an investment advisor (RIA) and, in that role, are overseen by the SEC and/or state securities agencies. Investment advisors can manage investment portfolios and provide advice on your investments. Under SEC rules, these professionals must act as a fiduciary, which means they must put your interests ahead of their own and eliminate conflicts of interest as much as possible. Generally, RIAs are paid a fee between 0.25% to 1.5% per year deducted from your portfolio.

Here’s where it gets tricky: No one really uses these terms on their business cards. Because that would be too easy, right? If you’re looking for someone who will provide holistic financial advice, experts usually suggest you work with a certified financial planner. Those with a CFP designation have a bachelor’s degree and have passed a rigorous exam to verify that they understand all aspects of financial planning.

Beyond doing your homework online, it’s also helpful to meet the advisors in person before you hire them. This is someone you’re going to take financial advice from and potentially working with for years to come, so it’s important that you understand how they conduct business and make sure you click with their approach. To prep for the meeting, the CFP Board has a helpful questionnaire you can use when interviewing financial advisors. Don’t be shy. Ask every question you have and make sure you’re happy with the answers. After-all, you’re choosing someone to help you make decisions that will impact the rest of your life.

– Richard Carr, Certified Financial Planner,

Carr Financial Group.