If you decide to seek professional help in retirement planning, here are some tips for choosing a financial planner.
If you decide to seek professional help in retirement planning, here are some tips for choosing a financial planner:
Anyone can call himself a financial planner, so carefully examine qualifications and experience. Seek recommendations from knowledgeable friends, accountants, lawyers and others you trust.
While there’s no guarantee, the designations “certified financial planner,” “certified public accountant/personal finance specialist,” “chartered financial consultant” and “chartered financial analyst” mean the person has a certain degree of basic education in the field, has passed tests and has taken continuing education.
Most financial planners are considered investment advisers. Such an adviser must register and file an ADV form with the state, spelling out education, work history and whether he or she has ever been part of a bankruptcy proceeding or convicted of a felony. Ask the planner for a copy.
The state Department of Financial Institutions (800-372-8303) can verify whether a planner is registered, tell you how long he’s been licensed (licensing means the person has passed certain qualifying exams and is subject to audit), and also report any complaints.
Choose a planner with at least five years’ experience — some recommend seven or eight years — so the person has gone through two to three stock-market cycles.
Here are some important ones to ask advisers you interview:
How are you compensated? Options include charging clients by the hour or job, managing portfolios for a yearly fee, and earning commissions on selling financial products.
How many hours do you spend with the average client? What is accomplished in that time? Ask this of someone who charges by the hour.
What is your commission? Ask this if the adviser receives commissions for selling financial products.
What follow-up attention will I get, and will I have to pay for it separately? The adviser should detail compensation and services in a contract or letter of agreement.
Can I have the names of clients in similar circumstances to mine? Then call and ask them: “Did this planner help improve your financial situation and if so, how? Would you hire this person again?”
Note: Be cautious about free financial-planning seminars. Some offer great general educational material, but seminars are commonly used to generate clients for sales of investment products.
Help picking a planner
Financial Planning Association: Most members of this professional association have earned the certified-financial planner designation, which means they must pass a comprehensive examination and continue to meet the education, experience and ethics standards established by the Certified Financial Planner Board of Standards. Web site includes a link to the Puget Sound chapter. Includes fee-only as well as fee-plus-commission and commission-only planners. 800-322-4237 or www.fpanet.org.
The National Association of Personal Financial Advisors: Association of fee-only advisers who make no commissions on products. Members must meet entrance- and continuing-education standards and comply with the group’s code of ethics. 800-366-2732 or www.napfa.com.
The Garrett Planning Network: Fee-only advisers who specifically serve middle-income clients, offering consulting on an hourly basis: 866-260-8400 or www.garrettplanningnetwork.com.
My Financial Advice: Web site that matches clients with fee-only advisers (including some from Gannett Planning Network) online; advice is provided by e-mail or telephone. Targeted primarily at middle-income clients. Charges typically $2 to $7 per minute, with an average hourly rate of about $150. www.Myfinancialadvice.com.