Oddlots

Random samplings of new affecting
the estate planning industry

Compiled by Christopher Weems, Associate Editor

Send an e-mail with your news item

How to Find a Good Financial Planner

NEW YORK--Lately the market has made more dips and turns than Highway 1, and it is hard to keep up. Stop chasing the Nasdaq, and get professional help-hire a financial planner whose job it is to help you keep your portfolio in order and steer you toward wise investments. Hiring a good financial planner takes legwork, so SmartMoney.com has developed some strategies to help you evaluate and hire the best person to manage your assets.

What to Look For: When hiring a financial planner, keep in mind that many people call themselves financial planners, but since the job is not officially regulated by the Securities and Exchange Commission, extra scrutiny is necessary. Look for someone who is a Certified Financial Planner (CFP). If the planner has a CFP license, it means they have passed a comprehensive exam and have to maintain continuing educational requirements every two years.

Where to Look: As in hiring an accountant, lawyer or even a babysitter, a reliable place to start is by getting references from your friends and colleagues.

There are also several professional financial planner organizations that offer guidance on their Web sites. The National Association of Personal Financial Advisors (http://www.napfa.org) offers email referrals based on your location and personal criteria. In addition, the Financial Planning Association (http://www.fpanet.org) has many articles and resources for choosing a financial planner, including a "PlannerSearch" engine.

Background Check: A reputable planner should outline his or her services, fees and investment strategy in a free consultation. Find out all the costs ahead of time, and make sure the investment strategy fits your goals. Ask for references from other clients, as well as the planner's ADV form, a government-approved form that describes the planner's firm, clients, securities, compensation methods and background.

What You Will Get: Once you hire a financial planner, you will tell him or her your financial situation and goals including retirement plans, savings and insurance coverage. Planners should provide you with services to help you achieve your specific goals, including strategies for investments, retirement and education savings, as well as providing a net-worth statement of your assets, a tax analysis, and an insurance recommendation.

How Much It Costs: Financial planners work on three different compensation methods: fee-only, commission and a combination of the two. Fee-only planners charge anywhere from $500-$1,500. Some charge by the hour (from $75-$250 an hour) and others charge based on assets, with fees running from 1% to 2%. Commission-based planners sell you products and services, with sales charges ranging from 1% to 10%. Keep in mind that these advisors face temptation to switch you to new investments in order to earn the maximum amount of commission. No matter what, just be clear on costs and expectations before you get started.