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10 Questions to Ask When Choosing a Financial Planner
<TABLE><TBODY><TR><TD class=subhead vAlign=top>1</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>What experience do you have?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has experience counseling individuals on their financial needs.
</TD></TR><TR><TD class=subhead vAlign=top>2</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>What are your qualifications?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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[FONT=verdana,helvetica,arial]®[/FONT] 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.
</TD></TR><TR><TD class=subhead vAlign=top>3</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>What services do you offer?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>The services a financial planner offers depend on a number of factors including 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 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 on tax matters.
</TD></TR><TR><TD class=subhead vAlign=top>4</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>What is your approach to financial planning?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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.
</TD></TR><TR><TD class=subhead vAlign=top>5</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>Will you be the only person working with me?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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.
</TD></TR><TR><TD class=subhead vAlign=top>6</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>How will I pay for your services?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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. Planners can be paid in several ways:
</TD></TR><TR><TD class=subhead vAlign=top>8</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>Could anyone besides me benefit from your recommendations?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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.
</TD></TR><TR><TD class=subhead vAlign=top>9</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>Several government and professional regulatory organizations, such as FINRA (formerly 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. 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.
</TD></TR><TR><TD class=subhead vAlign=top>10</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>Can I have it in writing?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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.
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10 Questions to Ask When Choosing a Financial Planner
<TABLE><TBODY><TR><TD class=subhead vAlign=top>1</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>What experience do you have?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has experience counseling individuals on their financial needs.
</TD></TR><TR><TD class=subhead vAlign=top>2</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>What are your qualifications?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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[FONT=verdana,helvetica,arial]®[/FONT] 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.
</TD></TR><TR><TD class=subhead vAlign=top>3</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>What services do you offer?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>The services a financial planner offers depend on a number of factors including 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 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 on tax matters.
</TD></TR><TR><TD class=subhead vAlign=top>4</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>What is your approach to financial planning?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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.
</TD></TR><TR><TD class=subhead vAlign=top>5</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>Will you be the only person working with me?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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.
</TD></TR><TR><TD class=subhead vAlign=top>6</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>How will I pay for your services?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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. 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.
</TD></TR><TR><TD class=subhead vAlign=top>8</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>Could anyone besides me benefit from your recommendations?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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.
</TD></TR><TR><TD class=subhead vAlign=top>9</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>Several government and professional regulatory organizations, such as FINRA (formerly 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. 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.
</TD></TR><TR><TD class=subhead vAlign=top>10</TD><TD class=subhead vAlign=top>Q.</TD><TD class=subhead>Can I have it in writing?</TD></TR><TR><TD> </TD><TD class=subhead vAlign=top>A.</TD><TD class=body>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.
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I've been on Wall Street for 17 years, so I have some knowledge.
If you got a cold call from an FA, then most likely he's starting off in the business and will take any account he can get, regardless of size (<$75K). If it is one of the top firms (MS, ML, UBS, Citi) an established FA is frowned upon for taking an account below $100k, although w/the economy the way it is I don't think too many will turn away accounts, they'll just have a registered sales assistant service it.
If you got a cold call from an FA, then most likely he's starting off in the business and will take any account he can get, regardless of size (<$75K). If it is one of the top firms (MS, ML, UBS, Citi) an established FA is frowned upon for taking an account below $100k, although w/the economy the way it is I don't think too many will turn away accounts, they'll just have a registered sales assistant service it.
why would someone just make this up? it's your money
fact is you will not get preferential treatment with an acct under this size.
good luck locking in the low mgr fees. But if you do have an acct with at least 100K, you might want to look for an overlay mgr.
Your best bet is to ask your friends and family for a referral to someone that they have worked with and is trustworthy. There are plenty of good FA's out there that would do business with someone under 75k. However, at that level most would advise a mutual fund portfolio as opposed to individual equities.
