financial planner by andrewa


									                             How to choose a financial planner

                                         inancial planning isn’t just for the wealthy. Having     and the Chartered Financial Consultant (ChFC) awarded
UW Tax-Sheltered Annuity Program
                                         a financial plan increases the odds that you’ll reach    by the American College of Bryn Mawr in Pennsylvania.
                                         your long-term financial goals, because you have         See the box for a list of common acronyms.
                                   taken the time to set targets and establish a realistic plan
                                   to reach them.                                                 The person you hire should not just be competent, but
                                                                                                  also someone you can trust. Here are some steps to help
                                   Depending on your background and goals, you may be             you find the right person for you.
                                   able to do this yourself. But in these financially
                                   unsettled times, many formerly self-directed                               Review your financial situation.
                                   investors are feeling the need for some                                     First of all, gather your financial records
                                   professional guidance. Or you may be at a                                    and review your personal and financial
                                   new juncture in life. Perhaps you’ve been                                     situation. Take some time to think about
                                   able to handle your investment strategy                                        what you want to accomplish and decide
                                   just fine, but now you’re about to retire,                                     what kind of help you need. Figuring
                                   and you wonder how much you can                                               out the kind of advisor you want will
                                   safely withdraw from your investments                                        help narrow your search and determine
                                   each year or where you should be                                              how much you pay. If you have no idea
                                   investing your money for the safest, yet                                       what you need, perhaps your first step is
                                   highest return. If you don’t have the                                          to have someone help you get a picture
                                   time or expertise to tackle these tasks                                 of your spending patterns, assets, insurance,
                                   yourself, an objective third party can help you cut            income, and short- and long-term goals.
                                   through your confusion and procrastination. As the
                                                                                                  Develop a list. Once you’ve established what you’re
                                   saying goes, advice that makes you money – or saves
                                                                                                  looking for, you can begin your search. You’ll need to
                                   you money – costs you nothing.
                                                                                                  develop a list of prospects. You may get recommenda-
                                   Finding the advisor who best meets your financial needs        tions from friends, relatives, or work colleagues, or from
                                   is an important education process in itself. Your choices      other financial professionals, such as your accountant.
                                   are many, including Registered Investment Advisors             You can request a referral from a financial planning
                                   (RIAs), stockbrokers, representatives from financial           organization – many have listings on the Internet of affil-
                                   institutions, financial planners, insurance agents,            iated planners in your area – or just look in the yellow
                                   accountants, and attorneys. Some advisors offer a              pages. Comprehensive advisor services are available
                                   combination of skills: a financial planner who is also a       from three TSA Program vendors: American United Life,
                                   stockbroker, a CPA who is licensed to provide                  American Express Financial Advisors, and Lincoln
                                   investment advice. Some firms offer a team of                  Financial Advisors. Go to our web site at
                                   investment and other financial advisors. Financial             hr/benefits/retsav/tsa.htm for contact information.
                                   planners (also called financial advisors or financial
                                   consultants) generally look at your                             Make preliminary calls. When you have chosen
                                   overall financial situation and design                                                 several candidates whose services
                                   a complete strategy to help you meet       What do the letters mean?                   meet your needs, call them with a
                                   your financial goals. Some may                                                         few preliminary questions. Find out
                                                                              AFC – Accredited Financial Counselor
                                   specialize in a specific type of                                                       their credentials and specialities.
                                                                              CFP® – Certified Financial Planner™
                                   financial planning, such as                                                            Ask what their income and invest-
                                                                              CPA – Certified Public Account              ment requirements are. Ask to have
                                   investment, estate and trust planning,     CFA – Chartered Financial Analyst
                                   or retirement planning. Others may                                                     information sent to you.
                                                                              ChFC – Chartered Financial Consultant
                                   look at the whole picture, not only        CLU – Chartered Life Underwriter
                                   providing investment advice but also
                                                                                                                          Gather information. Invest-
                                                                              PFS – Personal Financial Specialist         ment advisors in Wisconsin are
                                   offering advice on insurance               RIA – Registered Investment Advisor         required to register either with the
                                   coverage, long-term care needs, and        RR – Registered Representative              federal Securities and Exchange
                                   tax, retirement, and estate planning.           (Stockbroker)
                                                                                                                          Commission ( or with
                                   Anyone can call him- or herself a                                                      the Wisconsin Department of
                                   financial planner. There are no minimum licensing or            Financial Institutions ( Ask for and read
                                   educational requirements that must be met in order to put       both parts of the advisor’s “Form ADV,” which details
                                   that title after your name. Make sure that the person you       the advisor’s education and possible complaints as well
                                   trust with your money is qualified to provide good              as his or her fees, services, and strategies. You may view
                                   financial service. Look for credentials and know what           this form online at the Investment Advisor Public
                                   they mean. Financial planners can earn these                    Disclosure web site Currently
                                   designations by completing accredited courses of study.         only forms for investment advisor firms are available,
                                   Two of the most common are Certified Financial                  but there are plans to expand the database to individuals.
                                   Planner™ (CFP®), awarded by the Certifed Financial              You may also get copies of the Form ADV directly from
                                   Planner Board of Standards, Inc. in Denver, Colorado,           the investment advisor or from the SEC or WDFI.
Schedule and conduct interviews. Next, schedule and                      specific service, still others on a percentage of a client’s income
prepare for personal interviews with at least three or four              or asset base. You are responsible for finding out how the
planners. These initial half-hour- to hour-long interviews are           planner is compensated and what you are paying for. Don’t be
often free – make sure to verify this when you schedule your             fooled by misleading terms: “fee-based” is not the same as “fee-
appointment. Also, check to make sure the person you’ll be               only” but indicates that the planner receives part of his or her
meeting with is the one who will be your advisor. For couples,           compensation from commissions. Be aware that while some fee-
both partners should go to the interview. Each partner should            only planners do not sell financial products or get commissions,
feel comfortable with the advisor selected. Remember, statisti-          you may have to pay a fee to a broker when you purchase the
cally women can be expected to outlive their male counterparts.          investment the planner recommends. Be sure you understand the
                                                                         fee structure and know about situations where additional fees
Ask good questions. Bring a checklist of questions or                    may be charged, for example if a lawyer must be consulted.
issues you would like addressed with you to the interviews. You          Typically, the rate for financial planners is at least $100 per hour.
are interviewing the advisor for a job – and                                                    You should expect to spend several hundred
the advisor is interviewing you. As well as           Web sites to help you                     dollars per year for a basic financial plan.
inquiring about investment experience, pro-
fessional background, and education, you’ll           Alliance for Investor Education           Check regulatory agencies. If a
want to ask what strategies or principles the                planner receives compensation for providing
planner uses to develop financial recommen-        American Savings Education Council           specific advice involving securities, he or
dations. Find out what you can expect the                                 she must be registered. Find out about the
planner to do for you. Request a copy of a              Certified Financial Planner             disciplinary history of any brokerage firm
typical financial plan. If you haven’t gotten it             Board of Standards                 or sales representative by calling 1-800-
already, ask for the advisor’s ADV. Ask your-                         289-9999, a toll-free hot line operated by
self: Are you comfortable discussing your                   Department of Labor                 the National Association of Securities Deal-
financial situation with this individual?                ers, Inc. (NASD). The NASD will provide
                                                                savfacts.htm                    information on disciplinary actions taken by
Get brochures to help. Many useful               Catalog of US Government Publications          securities regulators and criminal authorities.
brochures exist to help you through this inter-             Related to Finances
view process, for example:                                Make a choice. Evaluate and reflect on
   10 Questions to Ask When Choosing a              The Financial Planning Association          each interview. Check the performance
   Financial Planner ( at                             record of the firms and planners you are
   When and How to Choose a Financial                                                           considering. Get several references from
                                                         Forum for Investor Advice
   Planner (For a copy write or call the                        each prospect of current and former clients
   National Endowment for Financial                                                             – especially of clients with goals similar to
                                                          Investing for Your Future
   Education, 5299 DTC Boulevard, Suite                                                         your own., and take the time to check them.
   1300, Englewood, CO 80111, 303-741-                                                          Do not rush. It’s important to select the
                                                      Investment Company Institute              planner who best meets your needs and with
                                                                                                whom you feel comfortable. When you
   Investment Basics, pages 29-34, available              Investor Protection Trust             initiate the formal relationship, be sure to
   at UW-Extension                  discuss the scope of the plan and have
   pubs/pdf/B3683.PDF, or
                                                                 Morningstar                    mutually-agreed-upon expectations of the
   The Scorecard: Finding a Financial                              outcome. And get it in writing. You should
   Adviser Who’s Right for You from the                                                         receive a letter of engagement, which lays
                                                              The Motley Fool
   Forum for Investor Advice, 1-800-200-                                  out the planner’s responsibilities and expec-
   1819 or                                                              tations, and yours as well. Remember you
                                                         National Endowment for Financial
Bring along financial documents.                                    Education                        need to educate yourself and be involved in
In the initial meeting the advisor will want to                                the financial planning process.
get a picture of your financial situation.           Securities and Exchange Commission              Always read the entire document before
Speed this process along by bringing the in-                                    signing it. Take it home with you to read, if
formation with you. The advisor you choose           Society of Financial Service Professionals      you need to. Make notes of items that need
will need this documentation anyway, and if                            clarification. Ask questions about everything
you provide it up front in writing, there’ll be        Wisconsin Department of Financial             you don’t understand.
more time for you to ask the questions you’d                        Institutions
like answered. You should bring: a rough                                       Implement your plan. Finally,
outline of your monthly budget including an                                                          remember that you must do your part. The
estimate of monthly expenses, recent tax returns, Social Security            best financial plan in the world is useless if you don’t implement it.
estimates, sources of present and future income, recent account              A planner may help you plot the course, but you are in charge. The
statements for retirement plans, recent bank and brokerage state-            decisions and the responsibility rest with you.
ments for all accounts, a list of major assets and estimated market          Thanks to Linda Boelter, UW-Extension family financial
value, a recent statement from all open credit card accounts, and            management specialist and member of the TSA Review Commit-
a copy of the latest declarations page from auto, home/renter’s,             tee, for her help with this article.
life, and disability insurance.                                              If you need this material interpreted or in a different form, or if you
                                                                            need assistance using this service, please contact us.
Know your cost. It is a fact of life that financial advisors
need to be paid. Some planners work for a fee, some work on                                University of Wisconsin System Administration
                                                                                           Madison, WI
commission, and some combine commission and fees. Some fees                                608-262-5564
may be based on an hourly rate, others on a specific charge for a                

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