The certified financial planner (CFP) designation is earned by passing a comprehensive exam, completing a series of courses, agreeing to a code of ethics, and having three years' worth of professional experience in financial planning. The CFP mark is arguably the most recognized comprehensive financial planning designation available. Are there other designations? Yes, literally hundreds. Some are good and some border on the inane (e.g., life underwriter training council fellow, chartered mutual fund counselor, etc.). A CFP shows that the advisor has at least a basic level of comprehensive planning-an understanding of tax, estate planning, investments, insurance, college and retirement planning, and cash-flow management. Are there bad financial advisors with the CFP? Yes. Are there good financial advisors without the CFP? Yes. But as a rule of thumb, we highly recommend the advisor you work with be a CFP.

There are two broad categories of advisors-fiduciaries and non-fiduciaries. Simply put, fiduciaries are legally obligated to put their clients' interests first, whereas non-fiduciaries can offer advice that is not in your interest as long as it is "suitable" to you. If possible, it behooves you to work with an advisor who will always put your interests first-ahead of their own interests and of the firm they work for. Note that almost all of the big brokerage firms you see advertising on TV are not fiduciaries. They can put their (financial) interests ahead of the client, and it is perfectly acceptable as long as they meet the minimum requirement of it being suitable to you.

The CFP designation represents the minimal amount of training from which to begin your advisor search. It's like thinking you're qualified to race in the Indy 500 because you have a driver's license. It's a good starting point, but with your financial life on the line, don't settle for the minimum. Look for your advisor to have advanced designations or degrees including a JD (law degree), CPA/EA (tax), CFA/CIMA (portfolio design and investment analysis), master's degree in tax, financial planning, economics or finance, an MBA with an emphasis in finance/investments, or the PFS/CPWA (financial planning).

Psychologists have studied what makes great performers such great performers. Their conclusion? Practice. Lots of practice, actually. The 10,000 hours of practice rule has emerged as a rule-of-thumb for how much practice is required to develop an expertise in a field of study. It often requires at least 5 years in one's profession to begin to have mastery. Again, this is a generality, but when you are hiring a financial advisor, attorney or CPA, we strongly recommend you do look at experience.

There are many different ways in which to pay for financial advice. You can pay by the hour, based on a percentage of assets the advisor manages for you (AUM or assets under management), a flat monthly retainer, commissions or any combination of the above. Commission-only advisors-nowadays usually stockbrokers and insurance salespeople-should be avoided. Their entire financial livelihood is based on selling you something. You want your advisory team to be objective and to be your partner, not your adversary. Fee-based advisor who charge an AUM fee and may receive incidental commissions on insurance products or a fee-only advisor who receives no commissions are particularly good choices.

Do a background check on a potential financial advisor to ensure there are no regulatory or legal infractions against him or her.

Every registered investment advisory firm must complete a document that discloses details about the firm, their clients, their experience and other valuable information. This is a treasure trove of information as you evaluate advisors. Things to look for are an experienced team (at least 5 years of experience), good education and credentials, a focus on serving clients similar to you (e.g., retiree, business owner, high net worth, sudden wealth) and no negative legal issues. Request a copy of the firm's ADV form.

The answer you want to hear is no. Why? If the advisor who is managing your investments is also the custodian (the firm that holds the money), there is a great chance for fraud. Since they hold the money they can create inaccurate monthly statements.

Your money should be held at a separate and unrelated firm from your investment advisor. Keep your assets at an unaffiliated company who will send you statements so you can see exactly what is happening in your accounts.

By asking these eight simple questions, you will have a much better understanding of the financial industry and the type of financial advisor you should hire to be part of your team. Investing and retirement planning is difficult. The only method to successfully navigate your way through the complexity is to have a team of experts who are the best at what they do, and a good financial advisor is critical to this.