How to Pick the Right Financial Planner For Your Needs

By the DoItYourself.com Staff

Why does anyone need a financial planner in the first place? It’s a good idea to know the status of your current financial health, which you can do by considering many factors, including but not limited to total income, insurance, any investments, liabilities, and assets. Once you know your overall financial position, a financial planner can then help you devise a plan to fix your financial weaknesses and further empower your financial strengths. A financial planner is good to keep around after your plan has been set into action in order to tweak it occasionally as your life circumstances change, as well as the current state of the market and tax laws that may affect you.

As well as factors that are not entirely under your control, certain life events may necessitate the help of a financial planner. If you marry or get a divorce, give birth to or adopt a child, need to fund your or your child’s education, receive a large inheritance or experience an unexpected loss of funds (ranging from getting laid off at work to a natural disaster), wish to ensure that you will have enough money to retire with and that your retirement plan is secure, contract a serious illness, need to care for an elderly or disabled parent – the possibilities, whether fortunate or unfortunate, for which it is advisable to have a financial planner on hand are endless.

A financial planner is not someone you will see rarely and exchange brief words with about a problem that can be fixed immediately, as with a plumber or an electrician. Ideally, you will be seeing your financial planner fairly often to have in-depth discussions about the current state of your affairs and all other financial matters. You and your financial planner will probably develop a close relationship. Since you will be entrusting the financial future of you and your family to this person, you should make sure that you wholeheartedly trust the financial planner you choose, and that this person is a highly ethical and professional individual. Talk to friends and family to find the names of people they have successfully dealt with in the past and trust. A good deal of the planners out there have a special client bracket they commonly deal with, such as retirees or small-business owners. Some of them focus on a specific topic in financial planning, like planning for retirement or divorces. Financial planners sometimes have minimum income or asset requirements, so make sure that your financial status fits the stated consumer profile of any financial planners you consider.

The very first thing you should do is ask for a Form ADV or brochure from several financial planners you are interested in working with. This is a written disclosure document that should give you most of the information you want and need to know about your financial planner’s education, degrees, work experience, licenses to sell things like life insurance, and the planner’s approach to planning, as well as basic services he or she provides. You should also find out what types of clients the planner usually works with and/or what areas of financial planning. Be sure you know what professional affiliations and business relations your financial planner has, including any that may present a conflict of interest. Be aware of the fact that your financial planner may sell the product of a company he/she does business with, or earn referral stipends by referring you to a specific company. Last but not least, discover how your financial planner prefers to be paid, and what he/she normally charges. The Form ADV or brochure from the financial planner of your choice should also describe any disciplinary action taken against him/her by any business association or governmental agency.

If this document does not give you enough or all of the information you wish to attain, then most planners will sit down with you for a free personal interview until you are satisfied. The full disclosure document is so important because it enables you to find out whether or not you can trust the financial planner you are dealing with. This person should be completely willing and able to give you answers to any questions you may have about any aspect of their experience, education, competence, practices, and connections. If the planner is reticent to give you certain information, seems shaky, unsure, or untrustworthy, don’t give him/her a second thought: move on to the next potential financial planner on your list immediately. Your financial future and that of your family are too precious to put in the hands of someone who may not have your needs and best interest in mind.

© Doityourself.com 2006