4 tips to find a financial planner - Military Financial Advice - Military Times

4 tips to find a financial planner

Most people would greatly benefit by getting their financial house in order: creating a workable budget, planning for retirement and college educations, starting a periodic investment program (however modest) and starting to plan for the future instead of hoping that it will all work out somehow. Articulating your financial goals, prioritizing those goals and creating a financial plan are the first steps to gaining more control of your finances in the present and achieving your financial goals in the future.

If you have ever said, "I make a good salary, but I don't know where it all goes," you could profit from assistance with budgeting and goal-setting. A good financial planner is a coach, someone who motivates people to do what they need to do.

The client articulates his goals, and the financial planner presents ways to achieve them. A good planner is a psychologist as well as a financial expert: His plan must fit you.

Once you have decided you need a financial adviser, how do you find one who works for you?

The two basic divisions in the financial adviser world are fee-only and commission. Fee-only planners don't sell investment products. They aren't stockbrokers or mutual fund salesmen, and they charge for their time at an hourly rate. They will assist you in implementing your plan and usually recommend specific stocks, bonds or mutual funds, but they do not receive compensation as a result of these recommendations.

Commission planners and hybrid fee/commission planners sell investment products on commission. They may also charge hourly rates or flat fees for financial plans. These types of planners are usually found in brokerage firms, banks and large financial firms.

Good advice can be had from both types of financial planners, but commission planners usually are more restricted in the types of investments they can recommend. And most financial planning tends to be computerized even though your personal data are used.Beware the planner who tells you that the service is free. There is no free lunch. The planner is always paid in some way, so you should inquire as to how the planner is paid before you sign up for services.

I have been a fee-only planner for more than 20 years, but I have many colleagues who are commission planners I would trust to give good advice. The important parameters in your selection process are the following:

1. How experienced is this financial planner? A six-week course does not make one a financial planner. At a minimum, the planner should be a certified financial planner. This takes about two years and six exams, and implies a minimum level of competence. A certified public accountant financial planner is also good -- the professional designation is PFS, or personal financial specialist. There are other designations such as ChFC (chartered financial consultant) and various special designations in the insurance industry. Be sure to ask how long the financial adviser has been practicing and what professional licenses he holds. A license means the planner is required to have a certain number of hours of continuing professional education each year.

2. How is this planner compensated? A free financial plan is not free. Payment has to come from somewhere. If you cannot find out how the planner is compensated, I suggest you look elsewhere. CFPs and CPAs are required by their ethics rules to disclose all compensation sources and possible conflicts of interest.

3. Do you like and respect this adviser? Is he someone you feel comfortable with and can work with? Will this planner be around for a while? Banks and brokerage firms tend to have high turnover.

4. Does the planner recommend all types of investments -- mutual funds (especially no-load funds that have no commission), stocks and bonds -- and specific investments as opposed to generic investment advice? If the planner is limited to a few mutual fund families, I would find someone who has access to a larger variety of investment options.

To find a good financial adviser, you can start with two sources. The National Association of Personal Financial Advisors, online at www.napfa.org, will help you find a local fee-only adviser. Call a local member to see whether he will consult on one or two issues. Check out the American Institute of Certified Public Accountants Web site, www.aicpa.org, too. On the left side, scroll down to the Personal Financial Planning Center to get a referral to a CPA financial planner in your area.

You can also try the Yellow Pages to find a financial adviser near you. Call and ask the questions above about experience, compensation, licenses, etc. If you like what you hear, ask whether the first interview is free. Unless you have some other way of evaluating the adviser, a face-to-face meeting is helpful.

Start slowly with one issue, and if you are happy with the service, go on to more questions. Rome was not built in a day. Everything takes time and effort. The rewards for early planning are substantial, but it is never too late to start. There is always an alternative course of action, but it is often difficult to ascertain without outside assistance.

A final word of advice: I have seen some costly results from the failure to plan, especially in the area of taxes. Get professional advice before you do something. This may be the best money you ever spent.

Barbara H. Pietrowski is a licensed certified public accountant, certified financial planner and personal financial specialist. Her practice includes tax preparation, fee-only financial planning and investment management. E-mail her at barbarapietrowski@yahoo.com.