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 what 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 that they 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. They are 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 designs are carried. Ask how the planner holds 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 accepted 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 that will use.
a. Salary. The employer of the planner will receive payments from you either in fees or awards
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 estimated, 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 divide, in writing, any conflicts of interest that might arise based on the business relationships that 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 do not 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.