7 Steps to Finding the Right CERTIFIED FINANCIAL PLANNER^TM Professional in San Diego

Making smart financial decisions is crucial for securing a stable and prosperous future.  Whether you’re looking to build wealth, plan for retirement, or navigate complex investment strategies, having a CERTIFIED FINANCIAL PLANNER^TM (CFP®) professional by your side can be a game-changer. However, with numerous advisors in San Diego, finding an advisor who is a CFP® practitioner who aligns with your unique goals and values can be daunting.

In this blog post, we’ll walk you through seven essential questions to ask an advisor to help you navigate the process of finding the right CERTIFIED FINANCIAL PLANNER^TM professional in San Diego for your circumstances. From understanding your financial needs to conducting in-depth research and interviews, we’ll empower you with the knowledge and confidence necessary to make an informed decision. By the end of this guide, you’ll be better equipped to identify a CFP® practitioner who not only possesses the necessary qualifications but also shares your vision for financial success.

1.   “Are you a fiduciary 100% of the time?”

Unfortunately, many financial advisors have to answer… NO! Because many advisors are “dually registered.” A “dually registered” financial advisor can take their fiduciary hat on and off.  They are not fiduciary 100% of the time. One day they are a fiduciary putting your interests first, and the next, they could be selling products with high commissions.

• A dually registered advisor can take their fiduciary hat on and off.

When a financial advisor acts as a fiduciary 100% of the time, you don’t have to wonder if they are just trying to meet a sales quota by selling you products to increase their bottom line. If there is any doubt, ask your financial advisor (or an advisor you are considering working with) to put their fiduciary status in writing.

2. “Who do you specialize in working with, and how many clients do you have?”

It’s important to ask a financial advisor what type of clients they specialize in working. After all, you wouldn’t go to a personal injury attorney if you needed help with a divorce.

Here are examples of financial advisor specializations:

• Specific professions, such as doctors, teachers, military, etc.
• Employees of a major company, like Qualcomm or Microsoft.
• Life changes such as retirement, divorce, marriage, or death of a loved one

Your financial advisor must have the correct expertise to help with your situation. It’s also comforting to know they’ve assisted other clients with similar needs.

3.  “What is my total cost to work with you?  How are you compensated?  Where can I see this in writing?” 

Just because you work with a CFP® professional who is a fiduciary 100% of the time doesn’t mean it’s easy to understand the all-in costs. Here are some of the common fees you might pay when working with a fiduciary financial advisor:

• Advice Fees: These can be in the form of hourly fees, one-time project fees, or a percentage of your investments.
• Transaction Fees: These are charged by the custodian (e.g., Fidelity, Schwab) when your advisor buys or sells investments on your behalf and can range from $0 to $50+ per trade.
• Expense Ratio: This fee is charged by a mutual fund or exchange-traded fund (“ETF”) to cover operational expenses and can range from 0% to 3% (or more!) per year.

It’s important to note that a fiduciary financial advisor is fee-only, meaning they are only compensated by the advice fee.

While they don’t benefit from other fees, they are legally responsibility for keeping those costs low. Every investment adviser is required to provide you a copy of their Form ADV 2A and Form CRS disclosure brochures and the Form ADV 2B Brochure Supplement of the Registered Investment Advisor Representative (the Financial Advisor) assigned to your account. These documents will give you a detailed breakdown of an adviser’s qualifications, investment strategies, business practices, and any conflicts of interest.

4.  “What experience do you have in navigating the complex world of financial planning?”

A financial advisor’s experience is more than the number of years they have been in business. What is likely most important is the type of experience they have in solving very specific problems. Some examples include:

• Reducing taxes in retirement.
• Creating tax-efficient retirement income.
• Lowering risk while maximizing investment returns
• Optimizing insurance policies.
• Increasing tax deductions through charitable giving (e.g., donor-advised funds).

Another critical question is: “Does your firm have a process for providing financial planning services and investment advice?”

This process should include, among others:

• How they gather the data from you.
• How they analyze your unique situation.
• How they arrive at their recommendations.
• The methodology for implementing and monitoring this advice.

One way to gauge a financial advisor’s experience is to ask about professional designations.

The CFP® (CERTIFIED FINANCIAL PLANNER™) is a particularly prestigious designation.

A CFP® professional is held to strict ethical standards and is required to go through a series of rigorous coursework and exams. Additionally, a CFP® professional must have at least three years of financial advisory experience and a four-year college degree. They must also take continuing education classes each year to keep up with the ever-changing world of financial planning.

5.  “Can you provide a list of all the services you provide?”

This list will help you understand if their services are focused on one area (i.e., investment management) or comprehensive in nature. Typical services might include general financial planning and investment management. However, many people have needs that go beyond the basics.

One example of an essential financial advisor service is tax planning. Believe it or not, your retirement tax bill could be higher than as a working professional. If you are a high-earner or diligent saver, hiring a financial planner with the expertise to lower your tax bill each year is critically important. It should be easy for an advisor to provide a list of the services they provide. If their answer is vague or confusing, a red flag may exist.

6.  “Where do you keep my money and how can I see it?”

If there is one thing on this list of questions you don’t want to overlook, it’s this one.

Please confirm that your financial advisor uses a reputable third-party custodian to hold your investment/retirement accounts. Well-known custodians include Fidelity, Schwab, and TD Ameritrade. When your advisor works with a trustworthy third-party custodian, checks and balances are typically in place to prevent them from going “rogue” with your money – they will generally have limited authority to manage your investments and oversee your accounts.

• Bernie Madoff was NOT using a third-party custodian.

Third-party custodians will frequently provide investors with FDIC and SIPC insurance, and  online access to see their accounts. Many also have physical branches across the U.S to visit.

7.  “What is your investment philosophy and how do you manage investments?”

While investments are just one piece of financial planning, it’s helpful to understand an advisor’s philosophy and approach before hiring them. Does the advisor use low-cost index funds? Do they actively trade individual stocks?

Additional questions to consider asking:

• How do you incorporate investments held in a workplace retirement plan like a 401(k)?
• How many positions and asset classes do you include in each portfolio?
• Can you incorporate individual stock positions that you don’t want to sell?
• What about tax-loss harvesting?
• Or tax gain harvesting?

In conclusion, finding the right CERTIFIED FINANCIAL PLANNER^TM professional in San Diego is critical step towards securing your financial future. By asking the questions we’ve outlined in addition to those for your circumstances, confidently navigate the process and make a better-informed decision. Remember to prioritize fiduciary advisors who always act in your best interest, ask about their specialization and experience in handling specific financial challenges, and thoroughly understand the costs associated with their services.

A CFP® certification is often a powerful indicator of a financial planner’s commitment to professionalism and ethical standards, making it a valuable criterion to consider.