Selecting A Financial Planner
The terms financial 'planner', 'consultant', and 'advisor' can be used interchangeably, but the skill set likely involves overseeing one or more areas of a client’s financial life - including cash flow and net worth, insurance coverage, tax management, debt reduction, investments, risk management, retirement and savings accounts, and estate planning. Before beginning your search, first identify the service(s) you want your financial advisor to provide.
Know What You Want
You will want to select your financial planner based upon how you want them to work for you. Do you want a comprehensive financial plan or do you just want to address certain topics? Does the advisor sell insurance and investment products recommended in the plan? If not, do they refer you to a specific brokerage firm or insurance provider? Ask if they have a financial relationship with the providers suggested.
Be prepared to share all things related to your financial life (including income, spending habits, insurance coverage, savings plans, debt levels, etc.). It’s especially important that you explain what you want to accomplish and the time frame that you expect to accomplish your goals.
Find Out About Them
There are no required standards or licenses for financial planning professionals, so ask what qualifies them to do the job. On the other hand, a person that sells financial products, mutual funds, and insurance must have the proper licenses and if they give investment advice, they must be registered with state or federal authorities. Look for a planner that is a CFP® (Certified Financial Planner). This is a well-respected financial industry designation. To check the background of a financial professional, you can use the Commodity Futures Trading Commission's (CFTC's).
How To Locate Them
Many people find their advisor by asking friends, family, or colleagues for recommendations. You can also search for financial advisors in your area on the Fee-Onlywebsite or the website.
Ask the planner to briefly describe their work experience and how long they have been in business. Ask about the companies and/or organizations in which they are associated. Ask about the type of clients and financial situations situations they like to work with. If you will be investing, make sure the person’s viewpoint on investing is not too cautious or overly aggressive for you.
How They Get Paid
Some advisors make their money on the commissions from the financial products they sell, some are fee-based, and some are a combination of both. They may charge hourly fees, require an annual retainer, charge a flat fee, or base the charge by assets under management, which many times is 1 to 2% of your portfolio value. Ask what their minimum fees are and what they cover. Get this information up-front.
The Financial Industry Regulatory Authority (FINRA) provides information about theof financial professionals and the organizations in which they are licensed.
Theand the provide resources and information about saving and investing.
Financial Information, Resources, Services, and Tools (FIRST)
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