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| Finding a financial planner |
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A financial planner is an individual who can provide a comprehensive system of money management recommendations. Recommendations include advice on taxes, estate planning, insurance, educational funding for your children, real estate, investment and securities. That person may be licensed to sell insurance and securities or may refer you to someone who is licensed. Financial planners are not covered by uniform state or federal regulations. Their qualifications and business practices can vary considerably.
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| There are three recognized designations for financial planners: |
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- Certified Financial Planner (CFP) - candidate must pass a two-day, ten-hour examination covering investment management, employee benefits, insurance, taxes, retirment, and estate planning. In addition, a candidate must have financial planning experience totaling three years, or without a college degree, five years. To maintain their CFP designations, financial planners must earn 30 hours of continuing education credits every two years.
- Chartered Financial Consultant (ChFC) - Most planners with this designation have a background in the insurance industry. A candidate needs three years of related experience and must pass ten two-hour tests. The American Society of Chartered Life Underwriters and Chartered Financial Consultants offers additional educational programs and tools to help members better serve their client's financial needs.
- CPA/Personal Financial Specialist (CPA/PFS)- The PFS credential was established for CPAs who specialize in personal financial planning. A CPA candidate must have completed a 150-hour program in accounting at an accredited college and passed the Uniform CPA Examination covering a number of topics including taxation, audit and attestation, regulation, ethics and professional responsibility. Additionally, the PFS candidate must have passed the CFP, ChFC, CFA (Charter Financial Analyst), or specific NASD (National Association of Security Dealers) examinations, demonstrated considerable experience and expertise in financial planning, and earned continuing professional education credits.
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To get the most out of your financial planning you should have some idea of what it is you want to accompolish (ex: insurance policy analysis, estate planning, investment advice, education financing, long term care planning, etc). Familiarize yourself with financial planning strategies and terminology. Reading personal finance publicatons and talking to others is helpful. When choosing a financial planner, consider asking the following questions:
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- How long have you been doing financial planning and working directly with clients?
- What credentials do you have?
- What did you do before you started doing financial planning?
- Who are your typical clients/areas of specialization (ex: retirees, young or middle aged, middle-income, business)?
- Will I be working directly with you or with others in your firm?
- May I see a few sample plans that you have developed for others?
- Can I have a list of references?
- Will other professionals such as accountants and attorneys be helping prepare my plan? If so, who are they?
- Do you do your own research?
- How do you keep your clients posted on financial information that is important to them?
- Do you do follow-up reviews?
- What is your approach to financial planning (i.e., bring together all financial goals or only advice on specific areas; how cautious or aggressive)?
- Will you impliment the plan or will you refer me to others for implimentation?
- How will you be paid (i.e., salary from the company they work for; fees from you based on a hourly rate or percentage of your assets and/or income; commissions paid by a thrid party from the products sold to you to carry out the financial planning recommendations; combination of fees and commissions)?
- Can you provide me with a disclosure statement (such as a Form ADV) detailing your compensation methods, conflicts of interest, business affiliations and personal qualifications?
- Will you give me a written advisory contract or engagement letter documenting the nature and scope of services you will be providing and how much they will cost?
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