Something to Think About, Edition #4: 10 Questions to Ask When Choosing a Financial Planner


by Scott Kaminsky 02-01-2012 11:56 PM

Happy New Year everybody! To start the 2012 Year off properly, I thought it might be helpful to offer some thoughts about what questions you should be asking when choosing a Financial Planner.
 
This may be one of the most important decisions you make with your finances and asking the right questions could be the difference between using a Financial Planner that adds value versus using a Financial Planner that takes advantage of you.
 
Q1. WHAT EXPERIENCE DO YOU HAVE?
            Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has experience counseling individuals on their financial needs.
 
Q2. WHAT ARE YOUR QUALIFICATIONS?
            The term “financial planner” is used by many financial professionals. Ask the planner what qualifies him to offer financial planning advice and whether he is recognized as a CERTIFIED FINANCIAL PLANNER™ professional or CFP® practitioner, a Certified Public Accountant/Personal Financial Specialist (CPA/PFS), or a Chartered Financial Consultant (ChFC). Look for a planner who has proven experience in financial planning topics such as insurance, tax planning, investments, estate planning or retirement planning. Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation or certification, check on his background with the CFP Board or other relevant professional organizations.
 
Q3. WHAT SERVICES DO YOU OFFER?
            The services a financial planner offers depend on a number of factors including credentials, licenses, and areas of expertise. Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advice unless registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or on tax matters.
 
Q4. WHAT IS YOUR APPROACH TO FINANCIAL PLANNING?
            Ask the financial planner about the type of clients and financial situations she typically likes to work with. Some planners prefer to develop one plan by bringing together all of your financial goals. Others provide advice on specific areas, as needed. Make sure the planner’s viewpoint on investing is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services. Find out if the planner will carry out the financial recommendations developed for you or refer you to others who will do so.
 
Q5. WILL YOU BE THE ONLY PERSON WORKING WITH ME?
            The financial planner may work with you himself or have others in the office assist him. You may want to meet everyone who will be working with you. If the planner works with professionals outside his own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on their backgrounds.
 
Q6. HOW WILL I PAY FOR YOUR SERVICES?
            As part of your financial planning agreement, the financial planner should clearly tell you in writing how she will be paid for the services to be provided.
 
Planners can be paid in several ways: 
Q7. HOW MUCH DO YOU TYPICALLY CHARGE?
            While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner’s hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.
 
Q8. COULD ANYONE BESIDES ME BENEFIT FROM YOUR RECOMMENDATIONS?
            Some business relationships or partnerships that a planner has could affect her professional judgment while working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies, securities or mutual funds have a business relationship with the companies that provide these financial products. The planner may also have relationships or partnerships that should be disclosed to you, such as business she receives for referring you to an insurance agent, accountant or attorney for implementation of planning suggestions.
 
Q9. HAVE YOU EVER BEEN PUBLICLY DISCIPLINED FOR ANY UNLAWFUL OR UNETHICAL ACTIONS IN YOUR PROFESSIONAL CAREER?
            Several government and professional regulatory organizations, such as FINRA, your state insurance and securities departments, and the CFP Board keep records on the disciplinary history of financial planners and advisers. Ask what organizations the planner is regulated by and contact these groups to conduct a background check. (See listing below.) All financial planners who have registered as investment advisers with the Securities and Exchange Commission (SEC) or state securities agencies, or who are associated with a company that is registered as an investment adviser, must be able to provide you with a disclosure form called ADV Part II or the state equivalent of that form.
 
Q10. CAN I HAVE IT IN WRITING?
          Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.
 
 
To Check the Disciplinary History of a Financial Planner or Adviser
 
Certified Financial Planner Board of Standards, Inc.
800-487-1497     www.CFP.net/search
 
North American Securities Administrators Association
202-737-0900     www.nasaa.org
 
National Association of Insurance Commissioners
816-783-8500     www.naic.org
 
Financial Industry Regulatory Authority
800-289-9999     www.finra.org
 
Securities and Exchange Commission
800-732-0330     www.sec.gov

 


Published 02-01-2012 © 2020 Access Athletes, LLC


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