CHARLOTTE, N.C., May 22, 2007 – Before you settle on a financial planner, here are some important questions to ask:
What are your qualifications? – Review your prospective financial planner’s resume carefully. Does he or she have a degree in economics or related field? What designations or certifications does he or she hold? There are many certifications in the U.S.: Certified Financial Planner (CFP), Chartered Financial Analyst and Personal Financial Specialist are a few of them. Does he or she belong to professional organization? (The Financial Planning Association and the Registered Financial Planners Institute are two reputable groups.)
What is your area of specialty? – While many financial planners are generalists, providing solutions for a broad range of needs, others cater to specific groups, such as members of particular profession, age-group (seniors for instance) or income bracket. There are also planners who specialize in certain services like estate planning, tax advice, retirement and investment planning and debt counseling.
What is your financial philosophy? – This is an important conversation to have before you fork over any money. Make sure your financial planner is clear on your risk and debt tolerance and that you are clear on your planner’s approach. But be open to someone whose approach is a little different from yours – that way you can partner to come up with good ideas, within your tolerances.
What do you need to know about me?– In addition to your financial situation – assets, income, savings, etc – a good planner will want to know your goals and priorities, investment cycles (how long before you need access to your money?), lifestyle considerations, tax situation and your risk tolerance.
Do you provide references and sample plans? – An experienced planner should be able to give you names of clients with similar goals or outlooks to your own, as well as at least one sample plan.
Will I be working directly with you?– If you’ll be working with an assistant or associate, make sure you meet with him or her as well.
How long have you been in business?– Don’t discount a planner just because they are new to the business. (All the tips above apply to them too, and do make sure they are certified.) Especially if they work for a reputable firm, they will have the resources of that firm and access to other more experienced planners. However, if you are uncomfortable with a planner’s resume or lack of references, look for someone with more experience.
How are you paid? – Financial planners earn their keep in a variety of ways: a flat fee or hourly rate, commission only, some combination of commission and fees, or by financial arrangement with their company (a percentage of the value of the portfolio, for instance.) Before meeting with a planner for the first time, make sure the initial consultation is free of charge, and ask for an estimate of how much their time and services will cost you going forward.
How will you keep me informed?– Expect an annual report. It’s a good idea to meet at least once a year to review your portfolio, more often if you have a very active account.
Have you ever been sued or disciplined by a regulator?– If your financial planner is also a certified investment advisor (qualified to recommend stocks, bonds and mutual funds), he or she will have had to register with either the Securities and Exchange Commission or the state securities agency. To find out if they have ever been sued or disciplined by a government regulator, you need to look up their “Form ADV” filed with the SEC or state securities agency.
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Launched in 1998 with headquarters in Charlotte, North Carolina, LendingTree, LLC also owns and operates LendingTree Loans sm, LendingTree Settlement Services, LLC, GetSmart®, and HomeLoanCenter.com. LendingTree, LLC is an operating company of IAC.