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Tips on Choosing a Financial Planner

financial planning subsidy

While the Benefits Office is not prepared to recommend specific financial planners, the following comments are intended to provide some guidance to employees who are seeking financial planning services.

Credentials, Licenses, and Education

The person should have a four-year degree, preferably in a finance-related field. Many individuals have moved into a financial planning specialty after first training as accountants or lawyers.

There are two certificates that indicate specific training in the field of financial planning:

  • Certified Financial Planner (CFP)
  • Chartered Financial Consultant (ChFC)

Experience

Look for someone with solid experience (at least five years, preferably more) in the financial planning field, or at the very least with strong experience in the related fields of insurance or securities. You should probably look beyond someone who has recently moved into the field after making a career change. The person you choose should have a good knowledge of tax laws, the financial products available on the market place today (not just the ones your planner may sell), retirement plan options, and a broad spectrum of investments in general.

Compensation

Financial planners are paid in one of three ways:

  • A flat fee is charged, based on the client's needs.
  • Commissions are earned from the products they sell.
  • A combination of both.

You should know in advance how your financial planner is to be compensated. Sometimes a flat-fee arrangement may be the most expensive. However, you need to know how much of a planner's compensation is to be derived from products you buy in order to decide whether it is better to buy the product carrying a commission or to pay a flat fee to the planner. Also, it is important to remember that the potential for a conflict of interest is greater if the fee is commission driven.

References

Don't hesitate to request the names of several clients, both long term and short term. Then call the references and ask how satisfied they were with the financial planner's work.

Specialization

Financial planning is a broad field, and not all planners are qualified in all areas. Try to be sure that the planner you are choosing is knowledgeable in the areas in which you are interested (e.g., estate planning, investment management, overall financial planning, and so on).