Wednesday, 4 March 2009

Choosing a Financial Planner - 10 Questions to Ask

There are a lot of reasons you might be considering getting help from
a financial planner. Planning for retirement is usually a primary
reason. Along with others like the education of your children, or
buying a home or not having the know how to get your finances in
order. Whatever the needs may be the right financial planner will be
instrumental in securing the future.

This article is intended to help you assess any number of financial
planners until find the one that is right for you. You will be looking
for a qualified individual who is both professional and with whom you
can feel comfortable with. You can use this article to create a
checklist if you would like.

1. How Experienced Are You?

Ask about how long they have been a financial planner. Ask about the
types of companies they are associated with and how many there are.
Ask for a brief description of heir experience in relation to their
current practice.

2. What Qualifications Do You Have?

Ask the kind of qualifications they have. Are they a ChFC (Chartered
Financial Consultant), CFP (Certified Financial Planner), PFS
(Personal Financial Specialist) or a CPA (Certified Public
Accountant). A lot of financial professionals can use the term
"Financial Planner" so make sure to find about which designations are
carried. Ask how the planner stays current with changing trends,
product developments and new product releases.

3. What Kinds Of Services Are Offered?

The services offered are dependent on issues like licensing, areas of
expertise and credentials. Giving investment advice requires you to be
registered with state or federal authorities generally speaking. Also,
in order to sell mutual funds, stocks, securities, or insurance
products a planner must be properly licensed. Like me, I carry all the
appropriate licenses for the insurance products I sell.

4. What Kind Of Technique Do You Use?

Some financial planners want you to have acquired a designated worth
before moving ahead. Some planners like to provide advice only in the
areas desired. Some financial planners will develop one scenario by
bundling all facets of your financial objectives. Make sure you
familiarize yourself with the financial situations the planner is most
comfortable with.

5. Are You The Only Person I Will Be Working With?

Make sure to find out if the planner will pursue the plan designed for
you, will the planner have assistants or will the planner refer you to
other professionals.

6. How Do You Require Payment?

Payment will be included in the agreement you design. The planner will
lay it out in writing how payment will be scheduled. There are usually
a few different methods a planner will use.
a. Salary. The employer of the planner will receive payments from you
either in fees or commissions
and pay the planner a salary.
b. Flat Rate. There will be a percentage, flat rate or even just an
hourly rate.
c. Commissions. A commission paid on the products sold to you to carry
out the plan designed for you.
d. Combination. Payment may be a combination of certain fees and a
commission on products sold. Some may offset certain fees for purchase
of certain products.

7. What Are Your Normal Charges?

A planner should be able to provide an estimate, or a ballpark figure
based on having rendered these services before. Usually the estimate
will include the flat fee or hourly rate for the services. It will
also include the commission paid on the products you may purchase
based on their recommendations.

8. Will Other Parties Benefit From The Advice You Give Me?

Ask the planner to disclose, in writing, any conflicts of interest
that might arise based on the business relationships they hold. Will
the planner receive any business for referring you to another
professional for advice or suggestions/products?

9. Have You Ever Had Action Brought Against You for Unethical Behavior?

There are several professional and governmental organizations such as
the NASD(National Association Of Securities Dealers) state insurance
dept. and CFP(Certified Financial Planner) Board who keep records of
these actions. Ask what organizations this planner is specifically
regulated by. Ask for the disclosure form known as the Form ADV 2.
This is a form the planner should have available upon request. This is
just a simple form that identifies all the organizations he/she is
affiliated with.

10. Get It In writing.

I don't care how you ask, get it in writing. Make sure all details of
the agreement are spelled out and understood. Make sure to keep this
document in a safe reliable place.


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Anonymous said...

Thank you for sharing. Smart individuals know that the key to a successful and stable financial future is collaborating with a qualified financial advisor. An individual’s plan may be updated periodically depending on his or her needs and the changes that so often occur throughout a person’s financial journey. One could argue that you can’t put a number on creating a stable financial future for you and your family, but the truth is you can.

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