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Ten Tips For Working with a Financial Planner

Enda Goodwin

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If you’ve never worked with a financial planner, here are some ideas to set your expectations and give you a sense of the process.

Set up a meeting and run the numbers for several scenarios, including what your finances might look like if you accept Social Security at the youngest possible age or wait until you are old enough to collect the maximum. In addition to your financial information, go to that meeting with a plan for your life.

Your first consideration should be to ensure that you have enough income for day-to-day expenses. Then, you must consider the effects of inflation. Next, the impact of possible long-term medical care needs to be considered, both for you and your spouse or partner. Once a budget is developed, there is no better test than to try living on it for a couple of months to determine how the budget feels and performs in reality.

Here are 10 tips to think about as you look for a financial planner.

Decide what services you need: Do you want someone to analyze your assets and liabilities, determine what your monthly income will be when you retire, and prepare a household budget for you to live within those means? Are tax and estate planning your primary concerns? Do you have enough— and the right kinds of—insurance? Or are you most interested in ongoing investment planning and advice?

Get referrals: Be cautious about using advisors who charge no fee; they live on commissions earned by selling financial products. Both the Institute of Certified Planners and the National Association of Financial Advisers can help you find a fee-only planner in your area. Some employers offer access to investment advisors as part of their benefits package. Otherwise, ask your accountant, family members, friends and co-workers for recommendations.

Attend financial planning seminars: Whether offered by local nonprofit organizations or financial firms overtly seeking new clients, these free seminars typically provide useful planning information and allow you to size up the presenters as potential financial advisors. Most presenters are hoping to sell you something later, so you should determine exactly what that is before deciding to meet privately with them.

Gather basic information about recommended advisors and their firms: Find out how many years of experience the advisor has and ask about licenses and/or professional accreditations. Is the firm an independent agency with truly objective advisors, or is it allied in any way with a larger organization involved in selling investment instruments?

Interview your top choices: Set up in-person meetings with one or more advisors to see how comfortable you would feel having them handle your financial planning, on the basis of both professional capabilities and personal chemistry. Some questions to ask:

  • How many individual clients do you have and what do you typically do for them?
  • How are you compensated? On a fee basis or with commissions on what you buy and sell for me? 
  • Exactly what services will I receive for those fees or commissions?
  • In what investment areas do you specialize?
  • Where do you direct your clients for services outside those areas of expertise?

Check references: After you have selected an advisor, ask for the names and phone numbers of three or four clients who would be willing to provide references. Then follow up with calls to find out what they perceive to be the advisor's strengths and weaknesses, if any.

Communicate your expectations: While you may have described your needs during the first interview with your advisor, it is important that you clearly convey your short- and long-term goals and your personal tolerance for financial risk-taking as you go along.

Inform your advisor of any major changes: Changes in income or marital status, the sale or purchase of a home and newly acquired dependents—from aging parents to returning children or grandchildren—are among the events your advisor needs to know about to maintain the viability of your financial plan.

Organize your statements, confirmations and correspondence: Keeping all these papers and communications in one place makes it easy for you to keep track of your investments and make changes as necessary.

Stay actively involved in the planning: Meet with your advisor at least once a year to review your investment plan and make sure it is on track with your goals. And trust your instincts to avoid investment recommendations you do not understand or are uncomfortable about; it's your money at stake.

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