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financial advisers - how to find

Finding A Financial Adviser

There's a lot you can do on your own to prepare and plan for retirement. But when you don't have time to step back and look at the bigger picture, a financial professional can help you review your situation and explore options to make sure your money will last. For example, a trained financial adviser or planner can assist with a multitude of tasks like these:

  • Creating an asset allocation strategy to reduce investment risk and promote better returns
  • Developing a spending plan
  • Steering you away from tax moves that could be expensive in the long run
  • Drawing up an estate plan or reviewing one you've prepared yourself
  • Deciding how to manage a lump-sum severance payment or retirement-plan distribution
  • Helping you through a difficult transition, such as a retirement, divorce or death of your spouse
  • Handling an inheritance or other unexpected financial windfall
  • Facing a financial crisis such as a serious illness, layoff or natural disaster
  • Caring for aging parents or a disabled child
  • Buying, selling or passing on a family business
  • Managing your money, if you have a healthy amount accumulated but don't have the time or interest in micromanaging it
  • Choosing whether to accept or waive joint survivor benefits on your pension
  • Developing a college-funding plan for your children or grandchildren
  • Selecting a life insurance or long-term care policy

What kind of adviser should you look for?

Once you decide what kind of financial services you need, your choice will be clearer. Financial planners have the broadest expertise. Investment advisers focus on your investment portfolio. Stockbrokers typically execute your investment decisions. Certified Public Accountants (CPAs) are experts on accounting and tax matters, and so on.

Once you’ve identified someone you might want to work with, there are two important questions to ask:

  1. Are you required to put my interests first? Some kinds of advisers have a fiduciary duty to recommend what’s best for you, while others are required only to suggest choices that are "suitable."
  2. How are you paid?

The primary forms of compensation are fee or commission. What’s the difference? Consider this:

  • "Fee-only" advisers charge by the hour or by the service, so you pay only for what you need. Some charge a percentage of the money they manage.
  • "Commission-only" advisers get paid only if they sell something (like an insurance policy) or persuade you to buy or sell investments.
  • "Fee plus commission" advisers charge a fee and also sell products on which they are paid commissions.
  • "Fee-offset" advisers charge a set fee, but deduct from it commissions earned on any products they sell.
  • Salaried advisers are paid regular compensation plus bonuses by their employer.

There are honest and hard-working financial advisers in all of the above groups. As a prospective client, you should not be embarrassed to ask how they are compensated.

Where can you find a good adviser?

Financial planners, who are held to the highest fiduciary standards, are also one of the best self-regulated groups. You might start your search with these two resources:

  • The Financial Planning Association provides referrals to its members, who have earned the Certified Financial Planner™ (CFP®) designation after completing extensive financial planning coursework and work experience. The FPA offers the brochures "How a Financial Planner Can Help You," and "How to Choose the Right One" by calling 1-800-282-PLAN or visiting their Web site.
  • The National Association of Personal Financial Advisors offers referrals to its membership of fee-only planners, as well as a brochure, "How to Choose a Financial Planner."

Tip: Before signing on the dotted line, be sure to check the certification of (and any disciplinary actions against) a financial planner through the Certified Financial Planner Board of Standards. You can also get a free disciplinary report from the Financial Regulatory Authority, created in 2007 to consolidate the regulatory functions of the National Association of Securities Dealers and the New York Stock Exchange.


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