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You may be considering help from
a financial planner for a number of reasons, whether it's
deciding to buy a new home, planning for retirement, long
term care insurance or your children's education, or simply
not having the time or expertise to get your finances in order.
Whatever your needs, working with a financial planner can be
a helpful step in securing your financial future.
The questions in this brochure
will help you interview and evaluate several financial planners
to find the one that's right for you. You will want to select
a competent, qualified professional with whom you feel comfortable,
one whose business style suits your financial planning needs.
An interview checklist has been included for your convenience.
1. 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 a minimum of three years experience counseling individuals
on their financial needs. |
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2. 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 holds a financial planning designation
such as the Certified Financial Planner mark. 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, check
on his background with the CFP Board or other relevant professional
organizations.
3. What
services do you offer?
The
services a financial planner offers depend on a number of factors
including credentials, licenses and areas of expertise. 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.
4. 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.
5. 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.
6. 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:
- a
salary paid by the company for which the planner works.
The planner's employer receives payment from you or others, either
in fees or commissions, in order to pay the planner's salary.
- fees
based
on an hourly rate, a flat rate, or on a percentage of your assets
and/or income.
- commissions
paid
by a third party from the products sold to you to carry out the
financial planning recommendations. Commissions are usually a
percentage of the amount you invest in a product.
- a
combination of fees and commissions whereby fees are charged
for the amount of work done to develop financial planning recommendations
and commissions are received from any products sold. In addition,
some planners may offset some portion of the fees you pay if
they receive commissions for carrying out their recommendations.
7. 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 would 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.
8. 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.
9. Have
you ever been publicly disciplined for any unlawful or unethical
actions in your professional career?
Several
government and professional regulatory organizations, such as
the National Association of Securities Dealers (NASD), 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 at back.) All financial planners who have registered
as investment advisers with the Securities and Exchange Commission
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 Form ADV or the state
equivalent of that form.
10.
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. |
