Be Careful With “paid” Vs. Paid Financial Planners
Whether you’ve just inherited an unexpected amount of money, are looking to buy a house , or are figuring out how to save money for retirement , there are plenty of reasons to hire a financial planner. And when it comes to finding the right financial planner, the last thing you want is to be scammed . The difference between how you find someone you trust and being misled can come down to one key concept: paid and paid financial planners.
Here’s what you need to know about the difference between paid and paid financial planners, and how to make sure you trust the right advisor.
Who can call themselves a financial planner?
First, as we said earlier , not every financial advisor can call themselves a Certified Financial Planner® (CFP). A qualified CFP is a professional certified by the Certified Financial Planner Standards Board, Inc. CFPs have a fiduciary duty, which means they are required by law to act in your best interest, and this is where the difference between “commission only” and “commission based” comes in.
What is the difference between “paid” and “paid” advisors?
Paid planners act as fiduciaries and only receive compensation from their client (you). They cannot accept commissions from third parties.
Paid consultants , however, are paid not only by you, but also from other sources, such as commissions from investment products. They are stimulated by investments that bring them more, and therefore they have conflicts of interest. If you see someone advertising their services as “paid”, they hope you confuse them with paid planners.
How to choose the right financial planner for you
If you’re worried about the world of differences based on the one-word difference between “paid only” and “paid”, don’t worry. Here are some additional ways to check out a financial planner before you trust them with your money. These tips come from certified financial planner and personal finance columnist Liz Weston at Oregon Live :
- Interview several candidates. You are not tied to the first scheduler found. Before using anyone’s services, ask them how they are paid and what you can expect from both their initial costs and the value of the investment they recommend to you.
- Know the right questions to ask. As we said above, you want to make sure that your financial planner has a fiduciary duty to act in your best interest. Ask about their qualifications and experience, including whether they usually advise clients like you.
- Do your own background check. Check certified financial planner status at cfp.net/verify-a-cfp-professional and check their bios at BrokerCheck.finra.org .
If there’s one takeaway here, it’s to ignore paid consultants and work with paid financial planners who should put your best interests first.