Financial Planners: directory of firms

There is no state or federal licence called financial planner. Registration attaches to conduct. A planner who advises on securities for compensation generally must be registered as an investment adviser or work as a representative of one. A planner who sells life insurance or annuities must hold a state insurance producer licence in the relevant line. A planner who does both usually holds both, and can be paid in two different ways on the same client.

Certifications are issued by private bodies that set their own study, examination, experience and ethics requirements and can revoke the mark for misconduct. That is useful, but it is a professional standard rather than a legal one. Ask which body issued the credential, whether it requires continuing education, and whether the planner is currently in good standing with it. Then check the regulatory registrations separately, because the two are not connected.

Fee-only planners are paid solely by their clients: an hourly rate, a flat project fee, an ongoing retainer, or a percentage of assets. Nothing they recommend pays them anything. Fee-based sounds identical and is not: the planner charges a fee and can also earn commissions on products sold, so the two revenue lines have to be disclosed and understood.

Commission-based planning is paid by the product manufacturer when you buy. That is not automatically worse, and for someone with a modest balance and a genuine insurance need it can be the only affordable route. But the SEC's point about compensation applies directly: the money comes from somewhere, so ask how the planner is paid, what a typical engagement costs, and what they would earn if you bought each thing they recommend.

Hourly work suits a single question: whether to take the pension as a lump sum, how to sequence withdrawals in the first retirement year, whether a refinance makes sense. A flat project fee suits a full plan with a defined deliverable. A retainer suits someone who wants an ongoing relationship without handing over assets. A percentage of assets bundles planning into portfolio management and only works if you have assets to manage.

Whichever model you are quoted, get the fee in writing with a scope attached, and ask what happens after delivery. Plans go stale: a job change, a birth, a move between states or a large inheritance can undo the assumptions. Ask whether updates are included, what an annual review costs, and whether implementation is billed separately.

The failure mode in this business is a free or cheap plan whose every recommendation happens to be a product the planner sells. A plan that concludes with one insurance solution to five different problems has not been built for you. Neither has one that avoids naming any specific cost, deadline or trade-off.

Ask for a sample plan with the names removed before you engage. Ask what the planner would recommend if you bought nothing from them. Ask for the relationship summary and, where the planner is with an investment adviser, the Form ADV Part 2 brochure, and read the fees and conflicts sections. A planner who is comfortable being paid only by you will have no difficulty with any of this.