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Interview financial planners before choosing one

Published Mar. 29, 2002|Updated Sep. 2, 2005

Whether you're deciding to buy a new home, planning for retirement or your children's education, or you simply do not have the time or expertise to get your finances in order, working with a financial planner can be a helpful step in securing your financial future.

If you are considering help from a financial planner, there are a number of questions you need to ask. The following questions will help you interview and evaluate several financial planners to find the one that's right for you. You will want to select a competent, qualified professional with whom you feel comfortable, one whose business style suits your financial planning needs.

1. What experience do you have? Find out how long the planner has been in practice and the number and types of companies with which they have been associated. Ask the planner to briefly describe their work experience and how it relates to their current practice. Choose a financial planner who has a minimum of three years' experience.

2. What are your qualifications? The term "financial planner" is used by many financial professionals. Ask the planner what qualifies them to offer financial planning advice and whether they hold a financial planning designation such as the Certified Financial Planner mark. Look for a planner with proven experience in financial planning topics such as insurance, tax planning, investments, estate planning or retirement planning. Find out what steps the planner takes to stay current with changes and development in the financial planning field. If the planner holds a financial planning designation, check on his background with the CFP Board or other relevant professional organizations.

3. What services do you offer? The services a financial planner offers depend on a number of factors including credentials, licenses and areas of expertise. 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 the state or federal authorities. In Florida if planners give any advice on investments and receives payment, they must be registered with the Florida Department of Banking and Finance.

4. What is your approach to financial planning? Ask the planner about the type of clients and financial situations he or 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.

5. Will the planner be the only person working with you? The financial planner may work with you himself or have others in the office assist. 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.

6. How do you pay? As part of your financial planning agreement, planners should clearly tell you in writing how they will be paid for their services. They can get a salary. Fees based on an hourly rate, a flat rate, or a percentage of your assets and or income, commissions paid by a third party, or a combination of fees and commissions.

7. Could anyone besides me benefit your recommendations? Some business relationships or partnerships that a planner has could affect their 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 his or 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 the financial products.

8. 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, your state insurance and securities departments, and the 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 or the state equivalent of that form.

9. 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.

In Florida you may check out the background of financial planners by contacting the Comptroller Bob Milligan's office at the Florida Department of Banking and Finance toll-free at 1-800-848-3792.

_ Dottie Teuton is executive director of the Better Business Federation. Information on this and other business/consumer questions may be obtained from the office by calling in Citrus County at 795-3547 or Marion County at 307-9222 or by visiting the office at 6460 W Gulf to Lake Highway, Crystal River, FL 34429, or contact by e-mail at betterbusifedvipweb.net.


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