Find a Financial Planner You Trust

Kiplinger's Personal FinanceJuly 2020

Find a Financial Planner You Trust
Use our road map to find an adviser who will truly look out for your best interests.

THE CORONAVIRUS PANDEMIC TOUCHED off increased demand for toilet paper, Clorox wipes, at-home hair coloring kits—and financial advice. A recent survey by the Certified Financial Planner Board of Standards found that nearly 80% of CFPs had seen an uptick in questions from existing clients since the pandemic began, and one-third reported an increase in calls from prospective clients.

That’s not surprising. Millions of Americans have seen their retirement savings bludgeoned by the bear market. Many are reviewing estate plans and insurance coverage. And although the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law in March, has numerous provisions to help Americans weather the crisis, it also raises a lot of questions, ranging from what to do with your stimulus check to whether you should take an emergency withdrawal (or loan) from your 401(k) plan.

“You can be a DIY investor when you have a 10-year bull market,” says Kevin Keller, chief executive of the CFP Board of Standards. “When we’re in a state of chaos, people feel like they really need somebody to talk to.”

A financial planner can help you navigate these disquieting times, but it has never been more important to find one you can trust. A critical step is finding a planner who adheres to the fiduciary standard, which requires that the planner must put your interests above his or her own. Fiduciaries are required to avoid conflicts of interest, such as steering you toward mutual funds with hefty commissions for themselves instead of lower-cost alternatives. Securities brokers follow a less stringent “suitability” standard, which means the investments they recommend must be suitable based on the client’s age and risk tolerance but don’t necessarily have to be the least expensive options available.

During the Obama administration, the Department of Labor adopted a rule that would have required all financial professionals who give retirement advice to comply with the fiduciary standard. That rule was struck down by a U.S. Circuit Court, which held that the DOL didn’t have the authority to enforce the rule.

Since 2009, certified financial planners have been required to comply with the fiduciary rule when providing financial planning, such as developing a retirement strategy. But starting June 30, all CFPs will be required to comply with the fiduciary standard whenever they give financial advice. The broadened standard will most likely affect brokers and insurance agents who are CFPs but don’t typi­ cally provide financial planning.


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July 2020