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Qualifying a financial planner: twelve incisive questions*

*Source: Adapted from Certified Financial Board of Standards

1. What experience do you have?
Find out how long the planner has been in practice and the number and types of companies and individuals with which she or he has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has successful experience counseling individuals on their financial needs.

2. What are your qualifications?
The term "financial planner" is used by many financial professionals. Ask the planner what qualifies him to offer financial planning advice and whether he is recognized as a CERTIFIED FINANCIAL PLANNER™ professional or CFP ® practitioner, a Certified Public Accountant/ Personal Financial Specialist (CPA/PFS), or a Chartered Financial Consultant (ChFC). Look for a planner who has proven experience in financial planning topics such as insurance, tax planning, investments, estate planning or retirement planning. Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation or certification, check on his background with CFP Board or other relevant professional organizations.

3. What services do you offer?
The services a financial planner offers depend on a number of factors including credentials, licenses and areas of expertise. Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advice unless registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or on tax matters. Make sure that you know what your "planner" can and should do for you, legally as well as morally.

4. What is your approach to financial planning?
Ask the financial planner about the type of clients and financial situations with which she typically likes to work. Some planners prefer to develop one plan by bringing together all of your financial goals. Others provide advice on specific areas, as needed. Make sure the planner's viewpoint on investing is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services. Find out if the planner will carry out the financial recommendations developed for you or refer you to others who will do so.

5. Will you be the only person working with me?
The financial planner may work with you himself. He may suggest that others in the office provide assistance. You may want to meet everyone who will be working with you. If the planner works with professionals outside of his own practice, such as attorneys, insurance agents or tax specialists, to develop or carry out financial planning recommendations; then get a list of their names to check on their backgrounds.

6. How will I pay for your services?
As part of your financial planning agreement, the financial planner should clearly tell you, in writing, how she will be paid for the services to be provided.

Planners can be paid in several ways:

  • A salary paid by the company for which the planner works. The planner's employer receives payment from you or others, either in fees or commissions, in order to pay the planner's salary.
  • Fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income.
  • Commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product.
  • A combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. In addition, some planners may offset some portion of the fees you pay if they receive commissions for carrying out their recommendations.

7. How much do you typically charge?
While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner's hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

8. Could anyone besides me benefit from your recommendations?
Some business relationships or partnerships that a planner has could affect her professional judgment while working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies, securities or mutual funds have a business relationship with the companies that provide these financial products. The planner may also have relationships or partnerships that should be disclosed to you, such as business she receives for referring you to an insurance agent, accountant or attorney for implementation of planning suggestions.

9. Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?
Several government and professional regulatory organizations, such as the National Association of Securities Dealers (NASD), your state insurance and securities departments, and CFP Board keep records on the disciplinary history of financial planners and advisers. Ask what organizations the planner is regulated by and contact these groups to conduct a background check. All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies, or who are associated with a company that is registered as an investment adviser, must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form. It is your money that is at risk and there is no reason why an honest agent would be unwilling to share an honest history.

10. Can I have it in writing?
Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference. Keeping one's attorney informed about financial decisions can be important, if for no other reason than to make sure survivors and heirs have easy access to all pertinent estate information.

11. Do I like and trust the individual who wants to serve as my financial planner?

12. Will the planner score well against the Bracher Center's Eight Attributes©?

Eight Attributes of an Integrity-Centered Company

1. CHARACTER: consistency between word and deed.
Do the leaders of your organization exhibit congruence between what they say and what they do, as well as what they say about what they did? Do leaders exhibit the right behavior?

2. HONESTY: truthful communication.

Do you have confidence that your leaders would never engage in or sanction misrepresentation?

3. OPENNESS: operational transparency.

Is appropriate information about your organization readily available?

4. AUTHORITY: employee encouragement.

Are you able to correct a customer problem? Do you have confidence that your actions will be supported?

5. PARTNERSHIP: honor obligations.

Does your company pride itself on timely fulfillment of all commitments?

6. PERFORMANCE: accountability throughout the organization.

When individuals, including senior executives, under-perform repeatedly, are they given due process and then, if necessary, replaced?

7. CHARITY: generous community stewardship.

Does your organization reach out to those in need?

8. GRACIOUSNESS: respect and discipline.

Does your organization demonstrate care and concern for all stakeholders?

Rev. July 25, 2003; original February, 2003.

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