If you're shopping for financial planning services, it may seem
like a jungle out there. There are advertisements everywhere,
and everybody seems "nice," but nice won't cut it when it comes
to your money. How can you cut to the chase and find a financial
planning expert that you can trust.
Start by learning what the different designations mean. You may
have noticed that there are three popular financial designations
that most financial planners hold. You'll want to choose one
with one of the following designations.
Like many CPA's, a Certified Financial Planner (CFP) must attend
about two years of training and pass a rigorous test. This
designation is given by the Certified Financial Planning Board
of Standards, a national organization. After two years of
preparatory courses, a Certified Financial Planner must earn a
passing grade on a ten-hour test given over the course of two
days. The Financial Planning Association can provide you with a
listing of Certified Financial Planners.
You may have also encountered some Chartered Financial
Consultants. These graduates of American College in Pennsylvania
have completed a series of exams and obtained real life
experience before earning their designation. However, the
program is geared more toward the insurance profession than
broad based financial planning. The Society of Financial
Professionals can provide you with a listing of these
consultants.
The American Institute of Certified Public Accountants offers
its own designation, a Personal Financial Specialist (PFS).
Certified Public Accountants can earn this additional
designation by completing a series of comprehensive tests and
demonstrate experience in financial planning. Most of these
designates are members of the National Association of Personal
Financial Advisors, and they can refer you to a PFS in your area.
All of the above certifying agencies require at least three
years of experience prior to certification. Other designations
do exist, but these three are the most reliable. Since many
unscrupulous individuals decide to call themselves "financial
planners," you'd be wise to look for one with a certification
from a nationally recognized organization.
Since the Securities and Exchange Commission doesn't regulate
smaller financial advisors (those with under $25 Million under
advisement), it is up to you to screen your financial planner
carefully.
You can begin by checking on the website of the National
Association of Securities Dealers website. They list financial
planners who have been disciplined on their website. Information
is also available by telephone from this association's toll free
number (800-289-9999). Also check with your state's securities
division for disciplinary actions and complaints.
Ask your planner for a copy of Form ADV, Part II. If you aren't
familiar with the form, they will be. This form is required by
the Securities and Exchange Commission from every financial
planner and should spell out how and what the planner will be
paid and any incentives they may earn. Sometimes they will
provide this information in brochure or pamphlet form, but
you'll know up front what your fees will be.
Finally, check references. A reputable planner won't mind giving
you a few references to call. Find out if they handle portfolios
similar to yours and if the client is satisfied with their
services. Ask about fees.
It's your future, so doing a little homework up front and making
sure that you're getting what you pay for is well worth it in
the long run. Make sure that your financial planner holds a
nationally recognized designation and check him out before you
hand over your hard earned money. Your time and effort is a wise
investment when shopping for a financial planner.
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