Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, March 22, 1993 TAG: 9303230320
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
ADVICE ON HOW TO GO ABOUT SELECTING A FINANCIAL PLANNER
A financial plan is much more than simply a set of investment recommendations.A properly drawn plan, in fact, should contain a baker's-dozen different elements to guide a family toward its financial goals. [See the list on this page.]
But how do you find a professional planner to help devise and execute the plan? How do you know the planner you choose is right for you? How will the planner be paid?
The industry is still largely unregulated, so almost anyone can call himself or herself a financial planner.
A person who claims to be a registered financial planner may have done nothing more than register his or her name with the State Corporation Commission.
The International Association for Financial Planning advised looking for a person with at least one of several educational credentials:
A designation such as Certified Public Accountant (CPA), Certified Financial Planner (CPF), Chartered Financial Consultant (ChFC) or Chartered Financial Analyst (CFA).
A law degree (J.D., LL.B. or LL.M).
A bachelor's or graduate degree in financial planning, money management or related business from an accredited institution.
The association said prospective clients should also ask about a planner's continuing education activities. "And make sure that financial planning is a primary - not a part-time - job."
It's important, the organization warned, to find out if the planner is registered as an investment adviser because "it is the minimum step a planner should take to comply with regulatory requirements."
The registration should be with both the Securities and Exchange Commission and the State Corporation Commission in Richmond.
And anyone who sells investments and insurance must be licensed with the National Association of Securities Dealers or the State Corporation Commission.
The group suggested asking for the names of clients and other financial professionals with whom the planner has worked.
Ask to see a sample financial plan prepared by the person you are considering.
The sample plan should show that he or she gathered specific information about the client, set goals, identified financial problems, wrote specific recommendations and ways of implementing them, and provided for continuing review and revision of the plan.
The cost of implementing your own financial plan must be within your financial means. In must, in short, be realistic.
Before you begin, the association said, you have the right to know the total cost of the plan and the services the fee will cover. "You should reject high pressure tactics and be wary of promises of very high rates of return."
A planner has one of four ways of earning his or her income: fee-only, fee plus commission, commission only or salary.
All of these methods are acceptable as long as you understand the situation in advance. You must judge any potential conflict of interest if the planner depends on commissions or a salary.
"If you are concerned about conflict of interest in the planner's method of compensation," the association said, "do not hesitate to ask the planner to explain."
Ask whether the recommended investments come from one company, for which the planner works, or from several different companies.
Find out if the planner only sells products on which he or she makes a commission, the association said. Ask whether the plan can be implemented by buying products from other companies.
A good financial planner will pinpoint areas of potential financial difficulty, such as an outdated will, and will work with other professionals on these special needs.
"Work with your planner to keep track of your investments on a regular basis," the association advised.
After the plan is implemented, you should understand how your investments are performing. "If you are in doubt, keep asking questions."