How do I find financial advice?
If you need financial advice, but spend more time researching your next cellphone purchase, it’s time to get your priorities straight. Nothing is more important than setting the right course for your financial future.
The first step is knowing your needs. What’s your next step? Understanding what different types of planners do.
Some financial planners help you develop a detailed strategy for meeting all your financial goals. “Others call themselves financial planners, but they may only be able to recommend that you invest in a narrow range of products, and sometimes products that aren’t securities,” the U.S. Securities and Exchange Commission cautions.
Here are some guidelines:
• Certified Financial Planners. The Certified Financial PlannerTM (CFP) designation is the gold standard of the industry. Planners must pass extensive coursework, have at least three years of full-time experience in the field, and meet high ethical standards. The median amount of investable assets placed with CFPs in 2010 was $500,000, according to the 2011 Board Report of the Certified Financial Planner Board of Standards Inc. Some CFPs accept clients of more modest means. You can check credentials at the Board of Standards website (www.cfp.net)
• Other designations. Another well-respected certification is the Chartered Financial Analyst, but be skeptical about other titles. Some designations require little more than a couple of days’ coursework. Check the requirements of any designation.
• Registered Investment Advisors. The RIA designation is valuable because it means the adviser is registered with the SEC or a state authority and is bound by law to act in his or her clients’ best interests. Most advisers are required only to provide investments that are deemed suitable for clients’ needs, a very subjective standard.
• Fee-only. More and more financial advisors are “fee-only,” meaning they are paid solely by the client and take no commissions or other income from companies that provide mutual funds, annuities and other investment vehicles. These advisors take a fiduciary oath to choose the best investments for you rather than those that might earn them the most income. Some advisers are “fee-based,” meaning they primarily charge fees but may also take commissions.
• Modest means. Some independent advisers cater to middle-class families and young people with limited assets. The Edelman Financial Group has lower minimum requirements for investable assets, for instance, and The Garrett Planning Network offers to charge by the hour.
Are you ready to start your search? Next up, interview at least three advisers. Ask the right questions – and lots of them – and check out their history.
Steve Higgins became a freelance writer in 2007 after a 25-year career as a business reporter and editor for daily newspapers in Georgia, Florida, Arizona and Connecticut. To learn more about Steve, please visit www.higginswriting.com.
Jill Schlesinger of MoneyWatch explains how to find the right type of adviser for you.