5 factors to consider when choosing a financial planner

September 5, 2014

Financial planners are not required to meet certain standards before dispensing advice. Here are five tips physicians should know.

Joel Greenwald, MD, CFP

Unlike physicians, who must have credentials to practice medicine, financial planners are not required to meet certain standards before dispensing advice. Here are five important factors doctors should consider before choosing a financial adviser.

1. Credentials

The financial planning world contains an alphabet soup of designations with widely varying educational requirements.

To help sort through this confusing array of designations, one can look for certified financial planner (CFP), of which there are 70,000 in the United States. A CFP must pass the equivalent of six college courses on topics including estate planning, insurance, investments and financial planning, and then pass a two-day comprehensive exam, which has a pass rate of just 60%. Continuing education also is required to maintain the accreditation.

A CFP who provides financial planning services pledges to work with his or her clients as a fiduciary, which means he or she must hold the client’s interest above his or her own in all matters.

2. Services offered

Many who call themselves financial planners offer only investment advice.

Advisers who offer comprehensive financial planning best serve busy physicians. This should include management of all assets, both those directly managed by the planner and those in 401(k) plans not held by the planner. Comprehensive planning should include life, estate, disability and property/casualty insurance monitoring, debt and cash flow planning.

3. Payment

There is no best or right way to pay for financial advice. Planners can be compensated in a number of different ways–hourly fees, fees based on assets under management, commissions on product sales, or some combination of these.

The important part is to understand how a prospective planner charges and what you will pay for so you can judge whether you will be getting value for what you pay.

4. Disciplinary history

Ask the planner what boards he or she is regulated by such as the Financial Industry Regulatory Authority (FINRA), state insurance departments, or CFP Board, and check with these regulators about any disciplinary history. A good place to start is FINRA’s BrokerCheck site, which can be found at http://bit.ly/1fe122t.

5. Experience with physicians

Physicians have unique financial planning needs that come from the debt they take on to finance education, the long years of training, delaying retirement savings, and the pressure of medical practice combined with other obligations, such as family and community.

This leaves physicians with little time to handle their finances. There are also liability issues that arise from medical practice. It makes sense to choose a financial planner who understands your needs and devotes a significant portion of their practice to advising physicians.

Joel Greenwald, MD, CFP, is a financial advisor and founder of Greenwald Wealth Management in St. Louis Park, Minnesota. Send your financial management questions to medec@advanstar.com.

This communication is strictly intended for individuals residing in the states of CA,FL,MN,NY,OH,PA,SD,WI. No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services. Securities and advisery services offered through Commonwealth Financial Network®. Member FINRA (www.finra.org), SIPC (www.sipc.org), a Registered Investment Adviser. Fixed insurance products and services offered by Greenwald Wealth Management, 1660 South Highway 100, Suite 270, St. Louis Park, MN. (952) 641-7595.