| 1 | Q. | What
experience do you have? |
| | A. |
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.
|
| 2 | Q. | What are
your qualifications? |
| | A. |
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.
|
| 3 | Q. | What
services do you offer? |
| | A. |
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.
|
| 4 | Q. | What is your
approach to financial planning? |
| | A. | 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.
|
| 5 | Q. | Will you be
the only person working with me? |
| | A. | 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.
|
| 6 | Q. | How will I
pay for your services? |
| | A. |
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.
|
| 7 | Q. | How much do
you typically charge? |
| | A. |
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.
|
| 8 | Q. |
Could anyone besides me benefit from your recommendations? |
| | A. | 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.
|
| 9 | Q. |
Have you ever been publicly
disciplined for any unlawful or unethical actions in your professional career? |
| | A. | 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.
|
| 10 | Q. | Can I have
it in writing? |
| | A. | 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.
|