|
What questions should I ask the financial
planner?
Below are a list of questions you should ask. Don't be afraid to ask these
questions, we are talking about your financial future. Go through this
screening process at several firms, and you'll feel more comfortable with
the process each time.
- How long have you been in the business
and what experience do you have??
Find out how long the planner has been in practice and the number and
types of companies with which she has been associated.
It should be at least three years. Ask the planner to briefly describe
her work experience and how it relates to her current practice.
- What are your qualifications?
The term "financial planner" is used by many financial professionals.
Ask the planner what qualifies him to offer financial planning advice
and whether he is recognized as a CERTIFIED FINANCIAL PLANNER™
professional or CFP® practitioner, a Certified Public Accountant/
Personal Financial Specialist (CPA/PFS), or a Chartered Financial
Consultant (ChFC). Look for a planner who has proven experience in
financial planning topics such as insurance, tax planning,
investments, estate planning or retirement planning. Determine what
steps the planner takes to stay current with changes and developments
in the financial planning field. If the planner holds a financial
planning designation or certification, check on his background with
CFP Board or other relevant professional organizations.
- Will you be the only person
working with me?
The financial planner may work with you himself or have others in the
office assist him. You may want to meet everyone who will be working
with you. If the planner works with professionals outside his own
practice (such as attorneys, insurance agents or tax specialists) to
develop or carry out financial planning recommendations, get a list of
their names to check on their backgrounds.
- What is your source of financial information?
This should be a combination of the firm's research, company contacts,
professional publications, and material that would not be easily
available to you.
- What type of accounts do you specialize in?
You needs should match his or her answers. Ask the financial planner
about the type of clients and financial situations she typically likes
to work with. Some planners prefer to develop one plan by bringing
together all of your financial goals. Others provide advice on
specific areas, as needed. Make sure the planner's viewpoint on
investing is not too cautious or overly aggressive for you. Some
planners require you to have a certain net worth before offering
services. Find out if the planner will carry out the financial
recommendations developed for you or refer you to others who will do
so.
- How many clients do you service?
More than a hundred clients is too many. He or she probably won't have
enough time for everybody.
- How often will you meet with me to discuss my portfolio?
You should meet at least quarterly.
- How will I pay for your services?
As part of your financial planning agreement, the financial planner
should clearly tell you in writing how she will be paid for the
services to be provided. Remember planners can be paid in several
ways:
- A salary paid by the company for
which the planner works. The planner's employer receives payment
from you or others, either in fees or commissions, in order to pay
the planner's salary.
- Fees based on an hourly rate, a
flat rate, or on a percentage of your assets and/or income.
- Commissions paid by a third party
from the products sold to you to carry out the financial planning
recommendations. Commissions are usually a percentage of the amount
you invest in a product.
- A combination of fees and
commissions whereby fees are charged for the amount of work done to
develop financial planning recommendations and commissions are
received from any products sold. In addition, some planners may
offset some portion of the fees you pay if they receive commissions
for carrying out their recommendations.
- How much do you typically charge
and are your commissions and fees competitive with those of other
similar firms?
While the amount you pay the planner will depend on your particular
needs, the financial planner should be able to provide you with an
estimate of possible costs based on the work to be performed. Such
costs should include the planner's hourly rates or flat fees or the
percentage he would receive as commission on products you may purchase
as part of the financial planning recommendations.
Have it proven with real examples.
- Can I have it in writing?
Ask the planner to provide you with a written agreement that details
the services that will be provided. Keep this document in your files
for future reference.
- How well have you done for other
clients?
Make sure you see some real figures concerning investment performance.
- Could anyone besides me benefit
from your recommendations?
Some business relationships or partnerships that a planner has could
affect her professional judgment while working with you, inhibiting
the planner from acting in your best interest. Ask the planner to
provide you with a description of her conflicts of interest in
writing. For example, financial planners who sell insurance policies,
securities or mutual funds have a business relationship with the
companies that provide these financial products. The planner may also
have relationships or partnerships that should be disclosed to you,
such as business she receives for referring you to an insurance agent,
accountant or attorney for implementation of planning suggestions.
- Have you ever been publicly
disciplined for any unlawful or unethical actions in your professional
career?
Several government and professional regulatory organizations, such as
the National Association of Securities Dealers (NASD), your state
insurance and securities departments, and CFP Board keep records on
the disciplinary history of financial planners and advisers. Ask what
organizations the planner is regulated by and contact these groups to
conduct a background check. (See listing at right.) All financial
planners who have registered as investment advisers with the
Securities and Exchange Commission or state securities agencies, or
who are associated with a company that is registered as an investment
adviser, must be able to provide you with a disclosure form called
Form ADV Part II or the state equivalent of that form.
- May I have the names of several
of your clients so that I may discuss your performance with them?
Beware of any professional who will not let you speak to two or three
of his or her clients.
<<== Complete Index of Questions
More Questions On
Financial Adviser ==>> |
