How can I ensure that my financial planner gives me truly independent advice?

Fee-only financial advisors

Fee-only financial advisors do not receive commissions. Instead, they are paid directly by their customers. This payment usually takes the form of fixed fees, hourly rates or a percentage of the assets under management.

These arrangements may involve conflicts of interest. For example, hourly rates can encourage advisors to work longer instead of smarter. Assets subject to management fees may encourage recommendations to build investment accounts at the expense of other goals. There is no perfect compensation model.

But the fee-only model is designed to minimize conflicts of interest by ensuring that advisors are paid by their clients, not the financial firms, and by aligning that payment as closely as possible with objectives of the customer.

Additionally, almost all fee-only financial advisors are independent, meaning they can recommend anything they think will serve your goals.

Fee-based financial advisors

Fee-based financial advisors are a mix of the two models above. Some of their compensation comes directly from their customers, and some of it comes in the form of commissions.

The balance between client fees and commissions here can vary widely between advisors, so you’ll need to do your due diligence. In addition, some fee advisors are independent and some are affiliated with a brokerage or insurance company.

How to find a fee-based independent financial advisor

If you’re looking for independent financial advice, your best bet is a fee-only CFP professional. There are no guarantees, but this route means you get someone with training and experience, and who will do their best to match their pay to your interests.

Here are a few different places you can find a fee-only planner:

• SmartAsset. SmartAsset connects people with financial advisors free matching tool.

• NAPFA. The National Association of Personal Financial Advisors is a network of fee-based fiduciary financial advisors. With the search function you can search by expertise, but also by fee structure and life stage.

• Garrett Planning Network – This is one network of fee-only financial planners that offer hourly scheduling services, although some also offer other compensation arrangements. Members must obtain their CFP certification or a combination of Certified Public Accountant (CPA) and Personal Financial Specialist (PFS) certification within five years of opening their business.

• XY Planning Network – This network is specially created to serve younger customers (Gen X and Gen Y). Each advisor is fee-only and offers virtual services. Every advisor in their search tool is a CFP professional.

• Alliance of Comprehensive Planners – The ACP is a paying network of financial advisorswith a specific focus on tax planning (which may be exactly what you’re looking for). Not all advisors are CFP professionals, but their designations are clearly displayed in search results, making it easy to filter on your own.

Next steps

References and compensation are important. If you start your search for a financial advisor by looking for a fee-only CFP professional, this is a great way to filter out many people who may not be as experienced or independent as you would like.

Don’t forget to focus on the “you” part of this search as well. Find someone who listens to you, can clearly articulate your goals and values ​​to you, and has experience working with people like you and in your situation.

Tips for finding a financial advisor

• Find a financial advisor doesn’t have to be difficult. SmartAsset’s free tool connects you with up to three vetted financial advisors serving your area, and you can interview your advisors for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• Consider a few advisors before choosing one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you can ask an advisor to ensure you make the right choice.

• Have an emergency fund on hand in case you encounter unexpected expenses. An emergency fund should be liquid – in an account that is not at risk of significant fluctuations like the stock market. The trade-off is that the value of liquid cash can be eroded by inflation. But with a high-interest account, you can earn compound interest. Compare savings accounts from these banks.

• Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and provides marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.

Matt Becker, CFP®, is a financial planning columnist at SmartAsset, answering reader questions about personal finance and tax topics. Do you have a question that you would like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Matt is not a participant in the SmartAsset AMP platform, nor an employee of SmartAsset, and has received compensation for this article.

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