Choosing a Financial Planner

Choosing a Financial Planner Nancy Johnson Jones, CFP® Financial Planning CFP Board’s definition: Financial planning is the process of meeting your life goals through the proper management of your finances. Why Financial Planning?       Reach a dream Buy your perfect home Reach retirement goals and dreams Pay for children’s education Buy (or sell) a business Big dreams – little dreams – start a plan – manage your finances Life Events & Financial Decisions        Becoming established Jobs and employee benefits Moving in with a partner Marriage Having children Divorce Buying a home Life Events & Financial Decisions       Retirement planning College planning Aging parents Medical issues Estate planning Emergency funds Financial Planning Helps You       Set realistic and personal goals Assess your current financial situation Develop a realistic, integrated plan Put your plan into action and monitor its progress Stay on track as circumstances change Provide direction to your life goals But How Do You Choose One?   Ask questions Do your research – – Ask friends and family members Especially those in situations similar to yours    Ask your accountant for referrals www.CFP.net Ask more questions. . . Working with a Planner      Very personal relationship Must have rapport and trust Must have integrity and ethics Fiduciary relationship – they put your interests ahead of their own Must work in a style and manner you’re comfortable with Which is Best?      Whatever’s best for you Conflicts of interest with each method Ask about conflicts – and how the financial planner manages them Get enough information to make you comfortable with your decision Cheapest isn’t always the best! How are They Paid?      Fees Commissions Fee and Commissions Fee-offset Salary 10 Questions to Ask 1. What financial planning – or other financial designations do you hold? 2. What is your educational background and work experience? 3. What services do you provide? 4. What is your approach to financial planning? 10 Questions to Ask 5. What minimums do you impose? (i.e., account size? annual fee?) 6. What is your typical client situation? 7. How do you prepare and present a financial plan? How is my progress monitored? 8. Will you implement the recommendations you provide – or someone else? 10 Questions to Ask 9. Tell me about your conflicts of interest and how you manage them? 10. How are you paid? What are the typical charges for a client in a similar situation to mine? Why a CFP® Certificant? Can help you identify financial planners who are committed to competent and ethical behavior when providing financial planning Why a CFP® Certificant?     Experience Ethics Education Examination Your Rights as a Client        You have the right to privacy You have the right to a planner who is professional You have the right to a planner who is diligent You have the right to a planner who has integrity You have the right to objective advice You have the right to a planner who is competent You have the right to be treated fairly Financial Planning Process 1. 2. 3. 4. Establish and define the relationship Gather client data, including goals Analyze & evaluate your financial status Develop and present recommendations and/or alternatives 5. Implement the recommendations 6. Monitoring your progress Make Financial Planning Work For You       Set measurable financial goals Understand the effect of each financial decision Re-evaluate your situation periodically Start planning as soon as you can Be realistic in your expectations Realize that you are in charge Best Practices      Take charge - you are in control of the engagement Look at the big picture - financial planning is more than just retirement planning or tax planning Don’t confuse financial planning with investing Don’t expect unrealistic returns on investments Don’t wait until a money crisis to begin financial planning Best Practices      Set measurable goals Understand the effect your financial decisions have on other financial issues Re-evaluate your financial plan periodically Start now - don’t assume financial planning is for when you get older Start with what you’ve got - don’t assume financial planning is only for the wealthy Check the Disciplinary History      Certified Financial Planner Board of Standards, Inc. 800-487-1497 • www.CFP.net North American Securities Administrators Association 202-737-0900 • www.nasaa.org National Association of Insurance Commissioners 816-783-8500 • www.naic.org Financial Industry Regulatory Authority 800-289-9999 • www.finra.org Securities and Exchange Commission 800-732-0330 • www.sec.gov Finding a Financial Planner      Certified Financial Planner Board of Standards, Inc. 800-487-1497 • www.CFP.net Financial Planning Association 800-322-4237 • www.fpanet.org National Association of Personal Financial Advisors 800-366-2732 • www.napfa.org American Institute of Certified Public AccountantsPersonal Financial Planning Division 888-777-7077 • pfp.aicpa.org Society of Financial Service Professionals 888-243-2258 • www.financialpro.org