“Hi, I think I’m interested in a financial planning but I’m not sure of the scope of a financial planner. My priorities are reducing my personal debt, planning for retirement and planning to support an aging parent. Would a financial planner design a debt-reduction budget as well as a long-term financial plan?”
Finding a financial planner is, in many ways, similar to finding a family doctor. Many characteristics that help define a “good” doctor also apply to a good financial planner. A good financial planner should be able to understand your needs, desires, and fears, and be able to distill all that information down to an understandable and actionable financial plan.
Of course, financial planners come in many different forms and it is extremely important for you to understand your options. Are you looking to work with a financial planner on an on-going basis? Are you looking for someone to analyze your current situation and provide you with an action plan? Or are you looking for someone to help you review your situation annually once the plan is set up? You should first have a clear understanding of your needs before contacting a financial planner as it will help you narrow down your search quite a bit.
Keep in mind that financial planners are paid in several different ways, including commission-only, fee-only, salary, or a combination of these methods. In general, you may receive more objective advice from a fee-only planner who doesn’t have an incentive to steer you toward a particular investment or insurance product. The only downside is that the fee you pay a fee-only planner might be higher than what you’d pay to a commission-based planner. Financial planners typically work with you in person, but also may be able to consult with you over the phone
It is also important to keep in mind that many planners specialize in different areas of financial planning. Some may specialize in retirement planning, while others may focus on insurance planning. Some financial planners might even have expertise in college planning or elder care planning. It is important to ask plenty of questions about the planners’ expertise and qualifications before engaging them in an on-going relationship.
Here is a list of things that a qualified financial planner can help you do –
- Set realistic financial and personal goals
- Assess your current financial health by examining your assets, liabilities, income, insurance, taxes, investments, and estate plan
- Develop a realistic, comprehensive plan to meet your financial goals
- Put your plan into action and monitor its progress
- Stay on track to meet changing goals and circumstances
- Keep you informed of changes in the industry, markets, and tax laws that may affect your plan.
So how do you get started? You can start by asking for names from friends or business associates that you trust. You can also approach your attorney, accountants, insurance agents, bankers, or other trusted advisors. You can also obtain a list of financial planning professionals through the Financial Planning Association website.
Best of luck in your search for a financial planner who can help you meet your goals.
Andrew B. Chou, CFP®
Senior Portfolio Manager
Westmount Asset Management, LLC
Los Angeles, CA