Before you hire a financial planner, you should conduct an interview and ask a lot of questions so you can determine whether he or she will be able to effectively handle your accounts. Your first question should be about experience. You need to ask about past work experience in order to find out how that knowledge will be relative to your current situation. Ask how many years your planner has been in the business, how many companies have they been associated with and the types of companies as well. You will also need to find out about any special services your financial planner could provide, for example, if you will also be seeking investment advice, it is important to find a planner that knows how to work effectively in a downturn market and economy. You should inquire as to the prospective planner’s credentials. It is important to realize that the title “financial planner” is broadly applied to many different types of industry professionals. It is wise to ask any potential consultant what they believe qualifies them to provide sound financial planning insight. You may wish to secure proof of professional certifications including that of Certified Financial Planner or Chartered Financial Analyst. Possession of these types of credentials is evidence of long term commitment to the financial services industry and the knowledge necessary to pass certification testing. Another useful question to ask is what types of continuing education the planner intends to pursue in order to stay abreast of industry trends and changes. Your next question should be about what the planner can offer you in the way of financial services. Planners are unable to offer securities or insurance products such as stocks or mutual funds unless they are properly licensed, but they are also unable to give advice about such investments unless they are registered with Federal or State authorities. You need to know what licenses, credentials and areas of experience your planner possesses, as there are some planners who can give financial planning advice yet are unable to sell financial products because they are not licensed to do so. Other financial planners are restricted and are only able to give financial planning advice on specific areas of training such as taxes or estate planning.
One basic issue to be determined is whether the candidate has financial product sponsors such as discount or full-service stock brokerage firms, insurance companies or banks or whether they are independent. The importance of having your planner’s viewpoint on investing aligned with your own in the area of cautious or aggressive investing can not be overstated. Determine the preferred type of clients and financial situations of each candidate. Learn whether their preference is for developing a single plan combining all of your financial goals as opposed to providing advice on a single area. You should establish the fees each candidate would expect. The planner’s fees will be determined by your needs but they should provide you with an estimate of potential costs based on the work you will be requiring. The potential fees would include the planner’s hourly rates, flat fees and any percentage they would expect in the form of commission on any products you purchase as part of their planning recommendations. Licensing and credentials are a vital consideration when choosing a planner. It is not uncommon for financial planning professionals to render opinions and advice on securities products even though they do not possess the proper licensing to do so. Certain states may have no licensing requirements for such work, but in all cases, it is important to know if a financial planner possesses all relevant credentials for the work he or she undertakes. Licensing involves rigorous exams and continuing education requirements which must be met in order to maintain the appropriate credentials. It is important to be cautious and aware of the fact that licensed planners may really be nothing more than salespeople wearing the disguise of planner or adviser.
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