In Part One of “Finding a Good Financial Planner,” WEALTH magazine explored some of the ways a financial planner could be of assistance in defining financial goals or making a plan to eliminate debt. In Part Two, WEALTH offers questions you should ask before hiring anyone to handle your money.
Once you have located financial planners in your area, consider your personal needs and do your homework. WEALTH magazine offers these tools and tips to get you started:
• Ask your potential planner about his own portfolio.
What are his investments? Where do his dollars go? More importantly, how has his personal portfolio done over the last 12 months, five years, 10 years? How has it done this year? How large is his personal portfolio and what are his personal goals? If a planner can’t or won’t tell you how he is helping himself, he may not be able to help you.
• Investigate your potential planner’s background and education before you hire him.
What is his academic background? What professional training has he had? What does he do to stay up-to-date?
• Ask those you trust (and are doing well financially) for recommendations.
How long have they used their planner? Why specifically would they recommend this person? How has their portfolio increased while using this planner?
• Look locally for a financial planner, as you will need to spend some time face-to-face to go over your finances.
How long does it take to get an appointment? How convenient is this location to your life?
• Ask about the planner’s clientele.
Is his typical client similar in situation, areas of expertise, or income generation to you? Will your planner understand you? Can you have client references so you can check them out?
• Ask for a free, one-hour consultation and see if you “click.”
You need to get along with someone who is going to tell you what you should do with your money. Do you feel like this planner understands you? Do you feel like you have his full attention when you talk? Did he spend more time listening to you or “selling” you on his services?
• Ask the planner for a copy of his ADV — the form filed with the Securities and Exchange Commission that discloses a lot of information about the planner and his practice.
• Know his fee structure in advance.
Does your planner charge a flat, hourly fee? Does he work for commissions from the companies whose services or products you buy? Some financial planners do both.
By asking savvy questions before you get into a long-term deal, you have the potential to find a great financial partnership.