Planning personal finances can be a daunting task, especially for someone who doesn’t have the knowledge or time to devote to it. But, there are financial professionals who can help..
Planning personal finances can be a daunting task, especially for someone who doesn’t have the knowledge or time to devote to it. But, there are financial professionals who can help.
A professional financial advisor works with clients to help them achieve their short-term and long-term financial goals usually through a written financial plan. A financial plan should be personal and based on your own financial goals. A key to developing the plan is getting to know you – this includes both your personal and monetary goals. Then, a financial advisor will ask about your financial life including your current financial picture, investment experience and risk tolerance. Once all the personal and financial information is gathered, a financial advisor will create a plan as a roadmap to achieving your goals.
First and foremost, you will want to choose an advisor whose credentials best match your specific needs and financial goals. There are many common designations that can guide you.
•A Certified Financial Planner (CFP) designation is probably the most common credential for a financial advisor. CFP professionals have passed national tests administered by the CFP Board of Standards that cover insurance, investments, taxation, employee benefits, retirement and estate planning. CFP professionals are required to be recertified every two years and they have strict practice standards and policing methods.
•Chartered Financial Consultants (ChFC) are the insurance industry’s financial advisors. They pass exams in finance and investing.
•Chartered Life Underwriters (CLU) have passed exams on insurance and related subjects and usually have experience in the insurance industry.
•Chartered Financial Analysts (CFAs) are experienced financial analysts who have passed exams in economics, financial accounting and portfolio management.
•Certified Public Accountant-Personal Finance Specialists (CPA-PFS) are public accountants that have earned the financial planner designation from the American Institute of Certified Public Accountants.
Experience, integrity and trust are important issues when choosing a financial advisor. A good way to start is by getting a few referrals from family members, friends or business associates. Then, schedule introductory meetings with three or four different advisors. Most financial advisors do not charge for these initial consultations and the meetings will help you get a sense of their planning approaches and personalities. Be prepared to bring all your financial documents and your significant other to the meeting. Some topics you may want to discuss during the initial meeting include:
Experience and focus. Some financial advisors specialize in certain areas of financial planning such as estate planning or tax planning. Also, there are those who do a lot of work with particular markets such as women or small business owners.
Fees or commissions. A financial advisor should be forthcoming about how they are reciprocated for their services. Advisors may charge a fee for financial planning services, a commission on products or a combination of both.
Products and services. Financial advisors can offer many different investment products and may offer additional convenient services such as online banking. Advisors who work with established financial services companies generally provide corporate support and tools that gives the advisor more access to research tools and investment information.
Reputation. The National Association of Securities Dealers website (www.nasd.com) maintains a database of information where you can check the background of a financial advisor.
Beware of aggressive salespeople. During your initial meeting, the advisor should be concerned with understanding you and your financial needs. The advisor should not be trying to make a sale. If you feel you are being rushed into buying a certain product at an initial meeting, seek out another advisor.
Finally, look for an advisor with whom you feel comfortable and have an easy rapport. This may be a “gut feeling” and one that is important to maintaining an open and long-lasting relationship with your financial advisor. Choosing a financial advisor is the first step to achieving your financial goals.
Dan Foster CFP, CPA, is a Senior Financial Advisor and Business Financial Advisor with Ameriprise in Vancouver. He can be reached at 360-883-2623, dan.h.foster-CPA@ampf.com or www.ameripriseadvisors.com/dan.h.foster-cpa/.