Before you hire a financial planner, you should conduct an interview and ask a lot of questions so you can determine whether he or she will be able to effectively handle your accounts. It is important to ask about the type, length and breath of experienced possessed by any prospective financial planner. You will want to know how many years they have been active in the industry. It will also be necessary to learn which firms for which they have worked. You may wish to have the prospective planner articulate some of his or her previous experiences in the field, and what types of things they learned and how they will apply that knowledge to new clients. Should you be seeking a planner who will provide investment guidance, you may wish to find a professional who has experience in navigating clients through economic downturns. You should inquire as to the prospective planner’s credentials. It is important to realize that the title “financial planner” is broadly applied to many different types of industry professionals. It is wise to ask any potential consultant what they believe qualifies them to provide sound financial planning insight. You may wish to secure proof of professional certifications including that of Certified Financial Planner or Chartered Financial Analyst. Possession of these types of credentials is evidence of long term commitment to the financial services industry and the knowledge necessary to pass certification testing. Another useful question to ask is what types of continuing education the planner intends to pursue in order to stay abreast of industry trends and changes. Find out what services the candidate is capable of offering. Proper licensing and credentials are required for many services. Lacking proper licenses, financial planners may not offer insurance or securities products such as mutual funds or stocks nor offer investment advice without registrations with state or federal authorities. Some planners are only eligible to give advice in particular areas such as tax matters or financial planning, while others are not licensed to sell financial products but can offer financial planning advice on a broad range of issues.
One basic issue to be determined is whether the candidate has financial product sponsors such as discount or full-service stock brokerage firms, insurance companies or banks or whether they are independent. The importance of having your planner’s viewpoint on investing aligned with your own in the area of cautious or aggressive investing can not be overstated. Determine the preferred type of clients and financial situations of each candidate. Learn whether their preference is for developing a single plan combining all of your financial goals as opposed to providing advice on a single area. You should establish the fees each candidate would expect. The planner’s fees will be determined by your needs but they should provide you with an estimate of potential costs based on the work you will be requiring. The potential fees would include the planner’s hourly rates, flat fees and any percentage they would expect in the form of commission on any products you purchase as part of their planning recommendations. Determine whether the candidate is licensed. Even though some states do not require licensing, the consumer may very well still insist that their planner be licensed and regulated. Many un-licensed financial planners offer advice in securities or insurance. The importance of licensing is to assure the qualifications of a candidate since in order to be licensed you must pass examinations and have mandatory annual continuing education.
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