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Trust, but verify

Former President Ronald Reagan popularized that maxim as he formulated the strategies, policies and negotiations that ended America’s Cold War with the old Soviet Union.

Now it’s a proverb any savvy investor must consider before hiring a financial planner, and for the same reason as Reagan followed it: I’ll believe what you tell me, but I’m going to check it out before taking another step.

Verification is a critical part of your due diligence because working with a financial planner means, at the end of the day, that you are entrusting that person with your plans, hopes and dreams. It’s an intimate relationship not to be entered into lightly.

That’s why I refer potential clients to three authoritative sources for objective analyses and evaluations of my experience, performance and background as a CERTIFIED FINANCIAL PLANNERS™ (CFP) and Chartered Retirement Planning Counselor® (CRPC).

I’ll talk more about organizations that issue those specific credentials—and how to use them in your due diligence—a little later. First, though, I want to introduce you to an independent watchdog where you take a deep dive into your prospective financial planner.

The Financial Industry Regulatory Agency (FINRA.org)

FINRA is not-for-profit organization authorized by Congress to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly.

It ensures every investor receives basic protections by testing, qualifying and licensing anyone who sells securities; reviewing truthfulness of product promotions to prevent misleading advertising; and requiring complete pre-purchase disclosures to make sure products fit investors’ needs.

I strongly urge investors to take advantage of FINRA’s BrokerCheck.

It’s a free searchable database of 6,800 registered firms and more than 660,000 individuals that reports out, among other things, complaints filed by clients, enforcement actions, education, licensing and professional certifications.

The information contained in a BrokerCheck background check enables you to:

  • Make an informed decision about a prospective financial planner based on independent research
  • Determine instantly if that person (or firm) is registered, as required by law, to sell securities, offer investment advice or both
  • Find a list of brokers barred by FINRA and review Securities and Exchange Commission actions brought by the agency against individuals

Now, about the CFP® and CRPC® credentials that I mentioned earlier.

The Financial Planning Association® (FPA®)

This organization’s mission is to benefit the public by granting the CERTIFIED FINANCIAL PLANNERS™ (CFP®) certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.

So, while any professional can hang out a shingle as a “financial planners,” only CFP® certified professionals have completed extensive training, are held to rigorous ethical standards, and are experienced professionals.

The FPA recommends five fundamentals, most of which can be verified—again, that word—on FINRA’s BrokerCheck, to guide your due diligence.

  • Is a financial planner a CFP® Professional? The CFP® designation demonstrates an ongoing commitment to developing the knowledge and experience to provide financial planning services.
  • What areas of expertise should your financial planner have? Depending on your goals, specializations such as retirement planning, tax, estate planning, education funding, insurance, cash flow, and debt management experience are invaluable.
  • Does your financial planner have a specific area of specialty? Financial planners who state defined areas of specialization must be able to document any additional education and certifications in those areas.
  • How long has a financial planner provided financial planning? There is an art and science to financial planning that often takes time to master. Time also allows the financial planner to refine the relational skills needed.
  • How will a financial planner approach your specific situation? What process does the financial planner take in doing financial planning? What systems do they have in place and how will the plan be developed, presented and implemented?

Following the FPA template will help you distinguish financial advisors—the most common financial services provider—from CERTIFIED FINANCIAL PLANNERS™. The difference: advice is transactional; client-centric, fiduciary-based planning has the potential to transform your life.

College for Financial Planning® (CFFP®)

CFFP is the education provider of choice for financial services professionals who are committed to adding enriching their knowledge through advanced programs and quality support services.

It offers a variety of credentials, including Chartered Retirement Planning Counselor® (CRPC®), who are certified to develop “road maps to retirement) focused on clients’ pre- and post-retirement needs, as well as issues related to asset management and estate planning.

The CRPC® designation is the industry-benchmark of retirement planning credentials and certification that its designees have:

  • Mastered specialized tax and estate strategies and objectives specifically for retirees
  • Understand the unique financial and emotional aspects of the retirement process

A final word

While due diligence is critical to ensuring you choose a knowledgeable, experience and ethical financial planner, your research results shall not be taken as a preview or prediction of your portfolio’s performance.

Glen D. Smith
CFP®, CRPC® | Chief Executive Officer | Chief Investment Officer | Cofounder

Glen D. Smith, CFP®, CRPC®, is the managing partner of GDS Wealth Management in Flower Mound, Texas. Glen received the Forbes’ Best-in-State Wealth Advisor accolade in 2019. Glen’s goal is to provide clients with highly personalized and attentive financial advice, coaching, and administrative support.

Content for this blog has been adapted from information located on the FINRA®, FPA® and CFFP® websites.

Any opinions are those of the author and not necessarily those of RJFS or Raymond James.

CERTIFIED FINANCIAL PLANNERS™ Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNERS™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

The Forbes ranking of Best-In-State Wealth Advisors, developed by SHOOK Research is based on an algorithm of qualitative criteria and quantitative data. Those advisors that are considered have a minimum of 7 years of experience, and the algorithm weighs factors like revenue trends, AUM, compliance records, industry experience and those that encompass best practices in their practices and approach to working with clients. Portfolio performance is not a criteria due to varying client objectives and lack of audited data. Out of 29,334 advisors nominated by their firms, 3,477 received the award. This ranking is not indicative of advisor's future performance, is not an endorsement, and may not be representative of individual clients' experience. Neither Raymond James nor any of its Financial Advisors or RIA firms pay a fee in exchange for this award/rating. Raymond James is not affiliated with Forbes or Shook Research, LLC

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