Obtaining Professional Advice
Attending a seminar, reading books on personal finance, casual discussions about money
management, or using computer software, can help measure the dimension of your concern
about these issues. They can also help focus on the areas which need the most immediate
attention, such as education funding or liability protection. However, these steps cannot help you
How to reorganize your present investments in order to increase your net after-tax
How to structure the investments held by you and your family in order to maximize the
potential financial aid for education funding or long term care.
How to select and purchase the best mix of investments and insurance to pre-fund
education, survivor needs and retirement income expenses.
What changes should be made in your estate plan and retirement plans as result of a
thorough needs analysis and goal setting.
Of course, you can try to "go it alone" in these regards, but you may not have the appropriate
training, background or the time. In any event, you probably do not have the licenses to make the
purchases of products directly. There are two types of persons who may be able to assist:
A product salesperson (insurance and securities) who is compensated entirely by the
commissions on purchases.
A qualified financial advisor who may charge a fee for the time required to prepare any
analysis and develop a report for your consideration.
There is certainly nothing wrong for a salesperson to receive a commission on purchases. That's
how persons are generally compensated in the financial products area. After all, if you purchase a
Certificate of Deposit at a local bank, you don't for a minute believe that the tellers and officers
are working for free. Their compensation is derived from the difference (you could call it a
commission) between what the bank earns on its investments and what it credits to your account.
However, there are many reasons why you need the financial advice first. Then you're free to
make the product decisions without feeling obligated to immediately make purchases. Nor do you
want to be under pressure to make purchases, simply because that is the only way a financial
advisor will be compensated.
For these reasons you may want to obtain the services of a qualified financial advisor who can
separate the advice stage from the product purchase. What are the qualifications that you should
look for in such a person? How do you go about finding and selecting a person who can help
chart your path through the financial dilemmas? The person you ultimately select must have:
Sufficient experience guiding personal financial affairs.
Professional education, both initial and ongoing.
Standing in recognized financial associations.
Adherence to the developed professional standards.
A commitment to client service and your objectives.
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The capacity to fulfill your current and future needs.
Sufficient staff, facilities and computer equipment.
Provides comprehensive analysis and ongoing services.
An ethical posture.
An ability to communicate effectively.
Of all the requirements listed above, perhaps the most important is the capacity to communicate
with you and your spouse, so as to clarify your attitudes and to help you understand all the
ramifications of the alternatives.
There are several professional designations, degrees or memberships which indicate that the
financial advisor has met educational, experience and ethical qualifications. The following are
presented for your benefit - not as an endorsement, or in any order of ranking or preference:
RFC Registered Financial Consultant. Has a professional financial planning designation, and
meets seven requirements of education, examination, experience, ethics, business conduct,
licenses and significant annual continuing education.
CEP Certified Estate Planner. Completed a six day intensive estate planning course and passed
an intensive examination, offered by the National Institute of Certified Estate Planners.
CFP Certified Financial Planner. Completed an educational program, passed certifying exams,
meets continuing education requirements and licensed by the CFP Board of Standards.
ChFC Chartered Financial Consultant. Has completed an educational program, passed certifying
exams and has met experience, ethical and continuing education requirements.
CFA Chartered Financial Analyst. Has completed exams on securities and portfolio management
and has met reference and experience requirements.
RIA Not actually a professional designation. A Registered Investment Advisor is a person or firm
that has filed with the Securities Exchange Commission and adheres to certain disclosure
requirements. This qualification is necessary for the rendering of investment advice.
CLU Chartered Life Underwriter. Has completed examinations covering the application of life and
health insurance in filling needs for survivor income, estate planning, business continuation and
RHU Registered Health Underwriter. Has qualifications and experience with disability and
CPA Certified Public Accountant. Has met educational qualifications, passed examinations and
met experience qualifications in the area of public accounting. A few CPAs have also taken
additional financial planning study and are Accredited Personal Financial Specialists.
FPA Financial Planning Association. A general membership trade organization formed by merger
of the IAFP and the ICFP
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IARFC International Association. of Registered Financial Consultants. Professional membership
group of the Registered Financial Consultants (RFC). Provides continuing education programs.
SFSP Society of Financial Services Professionals, formerly the American Society of CLU & ChFC.
A professional membership organization with continuing education and ethical practice
requirements. Members are primarily CLUs and ChFCs. Some are specialists in personal
financial planning, others on employee benefits, insurance or estate and business planning.
MS Master of Science. Or MSFS in Financial Services. This is an educational degree, similar to
an MBA, with concentration on personal financial planning, investment and taxation.
Local Advisor Selection
You can consult your local phone directories for financial consultants or financial planners, and
interview candidates by phone and eventually in person. The above will help you ask the right
questions about professional qualifications.
No candidate would possess all those designations, but the absence of having any certainly
causes concern. Your money is no less important than your health - and you should not casually
select an unqualified, inexperienced person who is not committed to ethical standards and
continuing professional education.
Your first approach might be to conduct a brief phone interview with a prospective financial
advisor, and ask questions relating to the items listed. If the practitioner sounds right, then
arrange an interview in his or her office.
This interview should be about one hour in length, and it should be offered with no fee. Be mindful
of any indication that the person is more interested in selling you a product than in helping you
define, measure and deal with your education funding and related financial problems.
In your interview you will judge the degree of an advisor's commitment to his or her profession,
ongoing professional education and technical competence. If you are considering the need for a
comprehensive financial plan, you should review a sample plan. Be certain to cover the
anticipated advisory costs and review the engagement letter or agreement very carefully.
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