|
How to Prepare For Your First Planner Visit
If you've never met with a financial planner before or if
it's been years since you've visited one, you need to find a
planner and then prepare for your visit.
Generally, you should research individual financial advisers
or firms, and you should look to trusted friends and family for
advice. You should interview two or three advisers by phone
before you sit down and understand their compensation structure.
It's also important to discuss your overall goals with the
planner you're interviewing so you can gauge their ability to
help you meet those targets.
Here are some questions you should ask a prospective
financial planner:
What training do you have? Find out how long the
planner has been in practice and what kind of certifications
they hold. A CERTIFIED FINANCIAL PLANNER™ professional is
someone with a minimum experience of three years who has
completed a comprehensive course of study through a degree or
certificate program offering a financial planning curriculum
approved by The CFP Board of Standards, Inc. CFP® practitioners
must pass a comprehensive two-day, 10-hour Certification
Examination that tests their ability to apply financial planning
knowledge in an integrated format. Based on regular research of
what planners do, the exam covers the financial planning
process, tax planning, employee benefits, retirement planning,
estate planning, investment management and insurance.
What services do you offer? What a financial planner
offers is based on credentials, licenses and areas of expertise.
Generally, financial planners cannot sell insurance or
securities products such as mutual funds or stocks without the
proper licenses, or give investment advice unless they are
registered with state or Federal authorities. Some planners
offer financial planning advice on a range of topics but do not
sell financial products. Others may provide advice only in
specific areas such as estate planning or taxes.
How do you charge for your services? Professional
planners will provide you with a financial planning agreement
that spells out the services they provide and how they'll be
compensated. Payment can happen in one of several ways:
- Salaried planners
are actually employees of a firm, and you help pay their
salaries through fees or commissions you agree to pay.
- Direct fees to
the planner through 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 based on the
planner's recommendations. Commissions are typically a
percentage of the amount you invest based on those
recommendations.
- A hybrid of fees
and commissions based on services. A planner may charge a
fee for designing a comprehensive financial plan and
occasional visits and calls to review it, while commissions
might come from products they sell that you invest in.
(Planners may offset some fees in exchange for commissions.)
Do you have any potential conflicts of interest? It
may seem like a rude question, but the best planners expect this
one and are prepared to make disclosure. Obviously, if a planner
profits from the sale of investment products to you, she must
spell that out.
How do you feel about teaching and training? One of
the primary benefits of having a financial planner is education
about the moves you are making or may potentially make. Don't
view a planning relationship as tossing someone your finances so
you won't have to deal with them anymore. As long as you're
paying for their services, make sure you get a long-term
education out of it.
When you select a planner, they'll give you a list of
documents and information to bring in for your first meeting,
and generally, it will be detailed on a checklist that may
include:
An income and expenditure checklist. This is a summary of
current and projected income. You'll need to bring or detail:
Income
- A current pay slip
- Profit and loss
statements for business income
- Pension income statements
- Statements of non-investment income
- Family trust distribution documents
- Tax returns
- Annuity, maintenance agreement statements
Expenses
- Home: Mortgage, rent statements, utilities,
household repairs, insurance, appliance purchases,
landscaping or house cleaning
- Transportation:
Gasoline, car loan, public transit expenses and parking
- Food: Grocery and restaurants
- Medical: Doctor,
dentist and prescription bills
- Education: Tuition, school fees
- Child care: In-home or outside-the-home
care
- Personal grooming: Clothing, shoes and
accessories, hair, makeup
- Pet care: veterinarian,
food and grooming bills
- Insurance: Health, life,
auto, disability
An asset and liability checklist. This is a summary of what
you own and what you currently owe. You'll need to bring or
detail:
Assets
- Principal residence
- Vacation home
- Investment property
- Bank accounts
- Investments
- Collectibles and personal property
- Automobiles, other vehicles
Liabilities
- Mortgages
- Credit card debt
- Auto loans
- College loans
- Business loans
March 2009 — This column is produced by the Financial
Planning Association, the membership organization for the
financial planning community, and is provided by Don McCarty of
Financial Decision Partners, a local member of the FPA.
|
