Money Matters – The Other New Year: Hiring A Financial Planner
BOSTON (CBS) – The two major things listeners write to me about are credit and hiring a financial planner.
Today there is more financial information than ever before just a click away on your computer. Technology is great but most of us end up with “paralysis by analysis”. You keep researching and making any kind of decision becomes impossible for you are not sure which advice to follow.
It usually takes a life event to push an individual into doing something about their finances. That life event could be a new job, marriage, buying a house, a birth, a divorce, a death, an inheritance or winning the lottery. Something pushes you into thinking about and taking action regarding your finances. And then you realize you need help!
I have bias here; I think you should be talking to a Certified Financial Planner (CFP). A CFP to be licensed must have passed a comprehensive exam that covers the key aspects of financial planning. They must have experience in the financial planning field prior to receiving the right to use the CFP designation after their name even if they have passed the exam.
So where do you find a planner? Begin by asking your friends, family, and the people you work with if they use a financial advisor. If you are already using other professional advisors such as a tax preparer ask who they would recommend. You want to find a planner that will understand your particular situation.
There are some associations that also provide names of planners. The Financial Planning Association (FPA) is by far the largest group of planners.
The Garrett Planning Network is much smaller listing fee only planners willing to help you solve a problem. They charge by the hour with fees ranging from $150 to $300 an hour.
The National Association of Personal Financial Advisors (NAPFA) is a group of fee only planners also.
Then you can look to the mutual fund companies for advice also. Vanguard, Schwab and T Rowe Price charge a fee for their advice. At Fidelity it’s free. You can talk to a rep at one of their investment centers or chat on the phone. You can use their website for an interactive program but my personal bias is talking to a real person.
I like the store front approach and I walked in one day and asked for help on setting up a college savings 529 plan and I was pleased with the help and information I received. I never let on who I was and was treated very well.
One more thing: I have bias here; I think you should be talking to a Certified Financial Planner (CFP). A CFP, in order, to be licensed must have passed a comprehensive exam that covers the key aspects of financial planning. They must have experience in the financial planning field prior to receiving the right to use the CFP designation after their name.
They have continuing education requirements of 30 hours that must be met every two years and they must sign a code of ethics. Now will this guarantee you the very best person in the world? Not necessarily! But you will at least have somewhat equalized the playing field in your search.
Gather up a list of planners and interview at least three. Most planners (most professionals for that matter) will not charge for an informational interview. This is an interview, so don’t go in expecting to get free financial advice here. This is an opportunity to see if there is a fit between you and the planner.
The advisor will be doing the same thing you will be doing. During this interview, you will have the opportunity to ask questions about the planner and their firm. Don’t be afraid to ask tough questions, remember it’s your money.
What kind of questions should you be asking? You want to know about a planner’s background, experience and the services that they offer. Many planners will provide you with a brochure outlining their services if you call and request it before the interview.