How to Choose a Financial Planner

A financial planner will help to guide you along the pathway to enduring financial stability. A good advisor looks at the big picture, evaluating where you are presently in order to design a plan to get you where you want to be in the future. But do you really need a planner, or can you do the job yourself?

In order to answer that question, you must take stock of your own desires and goals, as well as your likes and dislikes, your patience level and personal tolerances. If you have a basic working knowledge of financial matters, of investments, tax strategies and the like, you may feel comfortable enough to go it alone. There are tremendous amounts of information available through books, trade magazines, and of course, the internet. Software is readily available to help you calculate and make important decisions; online personal help is also available through membership websites and self-help groups. If you are inclined to roll up your sleeves, study and learn, and do the work yourself, the tools are certainly available.

If, however, you have neither the aptitude nor desire to develop and implement your own financial plan, then you’ll certainly want to the engage the help of a qualified advisor. But how do you choose? How do you know which planner is right for you?

The first thing you’ll need to do, again, is examine your own financial position and goals. Also, you’ll want to determine your own risk tolerance level. When your investment holdings take a downturn, will you lose your hair or will you be able to ride it out? And, you’ll need to know exactly what you want from your planner.

After completing your self-exam, begin shopping around for a good financial planner. One of the best ways to find what you’re looking for is word-of-mouth. Ask your family members, friends and business colleagues for the names of planners they’ve used or recommend. Narrow your list to several of the top candidates.

Once you have your prospects, set up interviews with each one. Make a list of questions to ask. And be sure that this initial consultation is free of charge. Remember, you are interviewing them regarding the possibility of hiring their services. You want to make sure that you’re comfortable with him or her; that their investment philosophy is in tune with your own. If your tolerance for risk is low, you don’t want to hire an investment planner who is aggressive about high-yield, high-risk stocks and bonds.

During the interview, take note of the advisor’s answers to your questions. Do they seem knowledgeable and honest? Are they straightforward concerning different types of investment strategies? Do they give you the pros and the cons? Do they listen intently as you describe your own financial situation and goals? Again, you must have a comfort level about this person’s philosophy and fiduciary commitment.

Before making a final selection, be aware of the various methods of charging fees that planners use. Once you’ve made your choice, do a background and credentials check. Ask to see the planner’s Form ADV. If the advisor is a stockbroker, you’ll also want to check the Central Registration Depository (CRD) records as well. If they’re a lawyer or accountant, check your state’s board associations for those particular professions. And last but certainly not least, contact the Better Business Bureau for any complaints that may have been lodged against the planner.

Be thorough in your search. Do your homework. Your money’s worth the effort to find the right financial planner to help you reach your goals.

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