Fee Only Financial Planner

A Planner Gives Professional Guidance

A person seeks a personal finance planner because he or she needs help and guidance in financial planning. Financial planning involves navigating the complexities of budgeting, saving for education, tax law, etc. The planner or advisor gives advice on how to manage personal finance.

As discussed in elsewhere on this site, one of the key points to watch out for when seeking such a professional is to ensure that there is some minimum level of professional qualification. The signs of qualification are one or more of three designations, a certified financial planner, a chartered financial planner, or a personal financial specialist. Having a designation shows at least that the professional has satisfied the requirements and standards of an organizational body such as the CFP Board of Standards.

Fee Only And Fee Based Planners Reduce Conflict Of Interest

The term fee only or fee based is not an earned designation, but rather a way for the planner to advertise or communicate to the client that there are no conflicts of interest because all of his advice is being paid for solely by the client. Instead of earning commissions on pushing investment products from a third party, the fee only financial planner is beholden only to his client. Non fee-based advisors will push products like commodity mutual funds, or give mutual fund advice, in the hopes of making a commission on the successful sale of these products. That in itself is not bad, but generates a potential conflict of interest which clients must devote energy to uncovering.

The NAPFA Association Is Made Up Of Fee Only Advisors

NAPFA stands for National Association of Personal Financial Advisors, and is an organization composed of advisors who adhere to the fee-only philosophy. According to them, they write:

The greater the advisor’s dependence on commission income, the greater the conflict. In the end, that conflict can cost you, both in out-of-pocket expenses and in the quality of advice you receive. At the National Association of Personal Financial Advisors (NAPFA) we believe there is a significant conflict of interest if an advisor stands to gain financially from any recommendations you may follow.

Using their collective power as a group, they promote the concept of ethical financial advising. To become a member, advisors typically have to prove that they satisfy certain standards of education and knowledge. Check out Kiplingers Personal Finance or personal finance websites like Mint.com for other possibilities.

Find A Fee Only Financial Planner At NAPFA

The NAPFA organization is a good place to start searching for a fee only financial advisor. The website provides a search (link here) for qualified advisors in different parts of the country. If you know of someone by reputation, you may search for his or her contact information in the online database also. Another way is to inquire friends and family who use such services and find one who does not work off commissions.

Other Qualifications Help Determine Good Planners

For peace of mind when doing financial planning, clients should seek out fee based financial planner who have taken the time to obtain qualifications for other kinds of designations. For example, there are three common certifications that show a certain minimum degree of professionalism. These are the CFP, or Certified Financial Planner, the ChFC, or Chartered Financial Planner, and the PFS, or Personal Financial Specialist. All three certifications require either testing or proof of education in the personal finance field.