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Financial Help
Getting
the right Financial help
Things to keep in mind when seeking professionals
Choosing
financial help has never been an easy task. Behind the smiling faces
are people who make a living off your money, which makes their motives
automatically susceptibly. The prosperity brought by a strong domestic
economy has fertilized the financial-services marketplace, and various
types of advisors are springing up to reap rewards.
When
making your choice, keep in mind that in recent years the lines between
different types of practitioners, planners, brokers, insurance
salespeople and accountants, have blurred somewhat, as each has
encroached on the other's turf. This is only natural in an era in which
bankers have morphed into financial-services salespeople and
financial-services concerns into mortgage brokers. Yet, even if you're
willing to hire hybrids, say a certified public accountant who will
also act as your financial planner, it's important to evaluate them
separately on each discipline. After all, they're probably charging
separately for each type of service.
Here, then, are some of the basic things to bear in mind when seeking
to hire professionals to handle your financial planning, stock trading,
insurance coverage and tax returns.
Where
to look for in your search for help
Financial Help:
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1.
The choices are many.
The strong domestic economy has increased the number of financial
practitioners from which to choose from.
2. Birds of a feather.
In hiring a pro, determine whether his or her other clients more or
less fit your own profile. If not, this probably isn't the right person
for you. |
3. Hire a captain for your team.
Planners are the linchpin of your financial team. A good one can give
you a blueprint on which to base your other decisions. Consider
starting out with a broker. Full-service brokers are often best for
novice investors.
4. How complex is your return?
Tax prepares who aren't CPAs are usually fine for simple returns, and
often charge less than CPAs do. CPAs are more suitable for high-income
individuals, the self-employed and those with fluctuating incomes.
5. Look for a CFP.
Consumers can narrow the field by focusing on certified financial
planners. Look for fee-only planners. Fee-only planners tend to have
fewer conflicts of interest than those who sell investments.
6. Check your local authorities.
Your state insurance commission's office may have information on
insurance agents and the companies they represent.
7. Get allocated.
The most important thing a planner can do for you is to help you set up
your asset-allocation plan.
8. Double-check the financial status of your
insurance company.
Though responsible insurance commissions aren't supposed to let weak
companies practice, some state regulators aren't exactly known for
being tough on the industries they're supposed to oversee.
Finding the help you
need!
In a largely unregulated field, know whom you can trust
The
first practitioner you should consider hiring is a financial planner.
That's because the planner is the captain of your financial team, the
professional who can best coordinate your goals and resources and
advise you on the hiring of other professionals unless, of course, like
a growing number of planners, they are marketing some of these same
services themselves.
Though many well-off individuals live their whole lives without ever
speaking to a financial planner, most of these people are making a
grievous error of omission. At the outset, planners study a clients'
entire financial landscape to assemble an asset-allocation plan: what
percentages of liquid assets should be in stocks, bonds and money
market funds. They dispense advice on what percentages of these stocks
should be domestic or international, how much to hold in small, medium
and large companies, and how much the investor should have in
short-term versus long-term bonds.
It's advice that no one-size-fits-all calculator or book can possibly
provide. Studies have shown that an investor's asset-allocation plan
has more impact on returns than any other factor, so hiring the right
planner to chart this course -- and help you hold to it -- is the most
fundamental investment move you can make.
The right planner is one who is qualified and competent, and who
understands your needs. For example, if a planner specializes in
advising nonprofit corporations, he's not going to do the best job
advising you on your taxable investments.
The first question to ask a planner: Is he or she a fee-only planner,
or are investments sold as well? Many consumer advocates warn against
the conflicts of interests inherent in wearing an advisory hat and a
sales hat simultaneously. Although fee-only planners may have conflicts
of their own, there is usually less motivation for them to feather
their own nests at your expense. Moreover, the client's goals with
these professionals are clear: You go to them for advice, and advice
only.
Many fee-only planners charge a percentage of the assets they manage,
while others charge an hourly rate. Unless you're going to be doing
most of the work yourself and require only occasional guidance, you'll
probably be better off paying the percentage.
It is hard for low-net-worth clients to find a fee-only adviser,
despite the fee-only trend, or perhaps because of it. So don't make
assumptions about how the counselor exacts the fee. Find out up front,
all the costs associated with products he or she recommends and the
overall services.
Next, look for specific credentials. While planners who sell securities
and insurance must be licensed, the act of advising clients on their
finances is, by and large, an unregulated frontier.
So how can you distinguish one planner from another in terms of
credentials? One way is to limit your field of prospects to those who
sport the initials CFP. This stands for certified financial planner,
and means that the individual is licensed by the Certified Financial
Planner Board of Standards, a private group that sets professional and
ethical rules.
CFPs must meet requirements for education and experience, pass a
licensing examination and agree to abide by the organization's code of
ethics. Of course, this doesn't mean that all CFPs are desirable
practitioners, but, like board certification for physicians, it gives
you a place to start. To confirm that a planner is indeed a CFP or to
get a list of those in your region, visit the board's Web site.
Getting
the right Financial help
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