What Is a Financial Planner?

If you wish you had someone pointing you in the right direction to handle your finances, you should consider working with a financial planner.

Finding a legit financial planner who understands your situation and can help you reach your goals can be life-changing.

A financial planner is your partner in creating financial security. Wherever you stand financially, they meet you and help you achieve your goals. Here’s everything you must know about finding a financial planner.

What Does a Financial Planner Do?

Whether you’re trying to tighten your budget, save for retirement, reduce debt, or invest for other reasons, a financial planner may help. Financial planners provide objective advice based on your information to help you reach your financial goals.

You may work with a planner online via video chat, in person, or over the phone. You’ll provide as many details about your financial life as possible to allow the advisor to provide you with the best financial advice.

Financial Planner Responsibilities

Financial planners have many responsibilities that vary depending on their specialty. Some of their duties include the following:

  • Taxes – Why pay more taxes than necessary? A financial planner can help you minimize tax liabilities, maximize tax deductions, and ensure your investments are optimized for tax planning.
  • Goal setting – An objective financial planner can help you think long-term, determine what you want/need to save for, and then help you create the plan to achieve it.
  • Analysis – Financial planners provide an objective third-party to evaluate your income, expenses, and overall financial situation. You’ll learn about your financial health and what steps are necessary to improve.
  • Insurance planning – Insurance is a necessary evil for some, and a financial planner can help you see the value in different policies and ensure you have enough coverage.
  • Retirement planning – Get advice on all retirement accounts, including 401Ks, IRAs, and pension funds. Learn how to maximize your savings for retirement while minimizing your tax liabilities today and in retirement.
  • Estate planning – Learn what you need to properly pass along your estate without leaving your beneficiaries with a large tax burden. Working with a financial planner with connections to an estate attorney may provide the best results.
  • Investments – Most financial goals require investing, including conservative and aggressive methods. A financial planner can walk you through your options to help you determine which is best.

Financial Planner vs. Financial Advisor

Financial planners are a category within financial advisors. Whereas financial planners focus on current and future finances, providing various tips and plans to carry out, financial advisors may be able to handle your portfolios, match you with necessary insurance or provide tax advice.

6 Types of Financial Planners

A financial planner isn’t a regulated term, so anyone can hang a shingle outside their office and call themselves a financial planner. However, plenty of planners have special distinctions that can put your mind at ease when using their services.

1. Fiduciaries

It’s typically best to work with a fiduciary. This means they must operate in your best interest, not their own. For example, a financial planner that works for a firm that manages a specific mutual fund may get higher commissions if they get you to invest in it, even if it isn’t the best option given your financial goals.

Fiduciaries, on the other hand, must choose the investments, assets, or products that will help them reach their goals, even if it’s an option that pays lower commissions.


2. Certified Financial Planners

As I said earlier, financial planners aren’t regulated; however, they can get certified as certified financial planners or CFPs.

This indicates that the financial planner underwent extensive schooling and must abide by specific work ethics to retain the certification. It’s typically best to stick with CFPs when hiring a financial planner.

3. Enrolled Agent

An enrolled agent specializes in tax preparation. They can advise and prepare consumer and business taxes but may also serve as a representative to the IRS for clients. Financial planners must pass a 3-part test and participate in ongoing education to be an enrolled agent.

4. Chartered Life Underwriter

A chartered life underwriter may be a good option if your financial planning needs are focused on estate planning and life insurance. CLUs have extensive knowledge about life insurance beyond what a standard insurance agent may offer, allowing you to make more robust financial decisions.

5. Investment Adviser

Investment advisers (purposely spelled with an ‘e’ as required by law) can provide advice on specific securities. They must be registered with the Securities and Exchange Commission and sometimes work under the name investment manager, portfolio manager, or wealth manager.

6. Wealth Managers

Wealth managers work with individuals with a high net worth who need services such as estate planning and risk management. This profession doesn’t require credentials or regulations, so be careful when choosing a wealth manager to ensure they are legit.

Choosing A Financial Planner

If you’re ready to move forward with a financial planner, here’s what you should consider.


  • CFP – If you are looking for help getting your finances situated, planning future financial goals, or want insight on getting out of debt, a certified financial planner is a great option. Certification ensures they are well educated and must abide by a specific work ethic.
  • CPA – If your financial planning needs are focused on tax planning, consider working with a CPA or certified public accountant.
  • CFA – A chartered financial analyst has even more testing and education under their belt and can help consumers with almost any financial planning issue; however, most CFAs handle business financial planning.


Consider only working with fiduciaries so you know their advice is 100% in your best interest. Trusting someone with your money decisions is a big deal, and knowing they aren’t taking advantage of you to get a larger commission check is vital.


Most financial planners have an area of specialty. Always inquire about what they offer so you choose the professional that can help with your needs. For example, if a CFP works with high-net-worth individuals and you’re just starting your financial planning journey, they wouldn’t be the best fit for you.


You can find reviews for professionals on many websites. Consider checking reputable sites like the Better Business Bureau or BrokerCheck to ensure a financial planner is legit or has no unresolved complaints.

Don’t be afraid to ask potential financial planners for references too. If they are unwilling to provide them, they may not be as legit as they seem.

Commission vs. Fee-Based Financial Planners

Financial professionals that work on commission can be biased. They, of course, want to earn the highest commission. While they might say this is in your best interest, you’re better off protecting yourself and working with fee-based planners with predictable costs so you know what to expect.

Customer Service

Ask a potential financial planner how you will communicate and how often you’ll hear from them. Also, ask how you can ask questions as they come up or issues that you aren’t sure how to handle.

Signs You Need a Financial Planner

So how do you know when you need a financial planner?

  • You started a new higher-paying job and didn’t know how to budget– Making more money shouldn’t feel like a problem, but if you aren’t sure how to best allocate your funds so that you’re saving for your financial future, a financial planner can help. This is a great way to avoid lifestyle creep and make your money work for you.
  • You are getting married– Tying the knot is exciting, but combining finances and sharing financial goals can be scary. A financial planner can help you get on the same page, understand one another’s goals, and create a budget that both partners agree to use.
  • You’re having a baby– If you’re adding to the family, there are many changes that need to be made, including carrying life insurance and starting a college fund. A financial planner can help you plan your baby’s future before they arrive so you have peace of mind and can enjoy your new bundle of joy.
  • You’re getting divorced– Even if you handled the finances in your marriage, you now have different income, debts, and savings goals. A financial planner can help you learn the best way to handle any support you receive, such as alimony or child support, and create a new budget for your new life.



How Much Does a Financial Planner Cost?

Like most financial professionals, the cost of a financial planner varies based on services provided, expertise, and location. Some financial planners charge a flat fee of around $2,000 for their services, and others charge by the hour, usually $250+. Yet some charge a percentage of assets under management, usually around 1% of your total assets.

How Do You Become a Financial Planner?

While anyone can say they are a financial planner, for people to take you seriously, you should have a bachelor’s degree in finance or business and obtain licensing in taxes, insurance, investing, or get certified as a CFP.

What Skills Do Financial Planners Need?

Financial planners have excellent analytical skills and have a solid understanding of investments and personal finance.

Are There Any Downsides to Using a Financial Planner?

The largest downside of using a financial planner is the cost. But like any service, you get what you pay for; just be sure you find a legit financial planner with reasonable fees.

Is a Financial Planner Worth It?

If you aren’t sure if you’re on the right track to reach your financial goals or wish someone would help you figure out your next steps, working with a financial planner makes sense. If you find someone you can trust with similar beliefs, you’ll get the help you need to reach your financial goals.

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