I pride myself on being objective as possible in writing these articles.  That’s why the topic of the Focus article may seem a little self-serving.  I have found so much being written in newspapers, magazines, and articles, that I decided to compile the best of each.  To be honest, my hope is twofold: (1) that if you are a client, you will feel comforted and (2) that you will be able to share this with others who are looking for assistance on financial issues.

According to Feb. 18, 2003 wire reports in the Money Section of The Birmingham News, “more than 95% of investors who work with a financial planner said they rely more on their planner than a year ago.  Roughly 62% of investors who don’t work with an adviser said they are more likely to hire one now.  Surprisingly, 43% said they would like to hire a planner but don’t know how.”

What is Financial Planning?

 According to the College of Financial Planning, “Financial planning is a process in which coordinated, comprehensive strateg- ies are developed and implemented for the achievement of financial goals.”  In other words, developing a game plan in which all the inter- related aspects of your financial life – life insurance, investing, utilizing employee benefits and retirement plans, selling property, giving strategies, income taxes, and estate planning – are given proper weight.  Helping you through this process is the job of a financial planner. 

Don’t confuse a financial planner with a stockbroker, money manager, insurance agent, or other profess- sionals who have limited focus.  Although a financial planner may offer investment or insurance products, he/she does more than advise on investments for you or help you buy an insurance policy.  According to the Interna- tional Association for Financial Planning, “Financial Planners offer something you may not be able to get from the traditional stock broker, banker, accountant, or insurance agent – a way to consolidate all aspects of your financial life into one coordinated plan, so that every investment and activity can be viewed in the context of your specific financial goals.”

 Many feel that only wealth individuals need, or can afford, financial planners.  The fact is most people have many facets of their financial affairs that could benefit from coordination.  A planner helps you choose, from among numerous alternatives the appropriate financial strategies specifically suited for your situation.  Also, a relation- ship with a financial planner can provide an ongoing, gentle account- ability that many find vital in helping them keep focused and on track.

What to Look For

Finding a qualified financial planner is no easy task.  Many individuals call themselves financial planners, financial consultants, financial advisors, personal planners, etc. Here are a few things you can look for that will increase your chances of finding qualified assistance:

Training -  According to Jane Bryant Quinn, “Anyone can pass out a business card that says ‘financial planner,’ ‘financial adviser,’ or ‘retirement specialist.’  You want the card to say CFP®, meaning certified financial planner.  CFPs take a rigorous two-day exam that covers 10 topics in a wide range of fields.  Only half of the exam takers pass. They are also required to keep their education up to date.  As with any professional, there’s no guarantee.  But at least you know the planner has been soundly trained.”

Experience -  According to Jane Bryant Quinn, “Stay away from rookies, even those who come highly recommended.  I know that everyone has to start somewhere, but you don’t want them practicing on your retirement fund.  Five years experience is minimal; 10 years is better.”  By the way, I have been practicing for 10 years now.

References -  Again, Ms. Quinn recommends to, “start your search for a planner by asking for references from friends at work.  Many CFPs specialize in certain professions – say, doctors, small business owners or senior executives.  They’ll be well-versed in the questions you’re most likely to have.”  This is where the majority of my clients come from – references from current clients to friends at work, church, clubs or other affiliations. 

Compensation -  Financial planners can be compensated through commissions, fees, or a combination of the two.  It is important to know both how and why they feel it is best for your situation.  In addition, it is important to find out what restrictions if any they have on financial products they may use.  Do they represent one company? A few?  Hundreds?  You don’t want to be directed into a few options that might not be right for you – whether that is an investment or insurance related product.

Expectations -  Gerri Willis from SmartMoney poses the question, “ultimately, what should I expect to happen with my adviser?  First off, he says, get ready to share all your personal financial information, everything from your monthly laundry bill to your personal lunch allowances.  The payoff is big.

In return, you’ll get a net-worth statement (a list of assets and liabilities), a cash-flow analysis, an income-tax analysis (and recommendations), a review of your investment program with recommended asset allocation, an estate plan, review of your insurance needs, a plan for paying for your kids’ education and, yes, a comprehensive plan that ties all of these elements together. 

You’re not done yet, though.  You’ll also want to meet with your adviser throughout the year to update your plan.” (Wall Street Journal, Feb. 9, 2003).

When is the Right Time to Get Help?

Answers here will vary.  According to Mr. Willis above, “Most people hire an adviser when they decide they can’t do it on their own anymore.  Or, if you’ve come into a large chunk of cash lately – say, more than 25% of your net worth – consider getting investment advice.” 

Raymond Ferrara, a certified financial planner in Clearwater, FL, suggests that if your portfolio lost more than 34% in the past two years (that would mean you lost more than the stock market), then you need a professional checkup.

My experience has shown me that many people error on the side of waiting too long.  There is greater value in starting earlier and not making mistakes (which could cost thousands of dollars), than waiting too long and having to go back and correct financial decisions.