Hiring A Financial Planner

Personal Finance

Hiring A Financial Planner

7th June 2007

There is a lot we know about dealing with our personal finaces and at the same time there is still a lot we don't know. Sometimes it is difficult to deal with our financial situation especially when in bad debt. I know I went through a break down when I was financially in trouble. We all need help at some point and if you are looking at investing or estate planning or simply working your way out of debt, it might be the right time to seek the services of a financial planner.

Personal Finance Financial planning involves the process of wisely managing your money so that you can achieve your goals. Befor you hire a financial planner it is important for you to know what type of a planner willl suit your needs. Remember that currently there are no regulations for financial planners either by state or federal government. Below is a description of each of the types of planners and what they can help you with. (The source of this information is MoneyCNN.com). You can also find out more at their website.

Certified Financial Planner (CFP) - Roughly 53,000 CFPs nationwide provide financial planning and advice on topics from retirement planning, investments, tax and estate planning, and insurance needs.
Certified Public Accountant/Personal Financial Specialist (CPA/PFS ) - Provide overall financial planning with an emphasis on taxes and accounting.
Investment Adviser or Registered Investment Adviser (IA or RIA ) - As the name suggests, an IA advises clients about securities. Note: A financial planner or broker may be an investment adviser but not all investment advisers are planners or brokers.
Broker - Brokers are paid to trade securities on behalf of customers. Note: This is different than giving investment advice, though some brokers may also be registered investment advisers. Some firms may call a broker different titles such as an "account executives" or a "registered representative," and some brokers may specialize in one type of investment.
Chartered Financial Analyst (CFA) - CFAs are generally portfolio managers and analysts for institutional clients, such as banks or mutual funds. But some of the nation's 50,000 CFAs advise wealthy individuals or families who have sophisticated investment needs.
Certified Investment Management Consultant (CIMC) - Advise high-net worth private clients on investments, although a few CIMCs advise institutional clients such as pension funds or trusts.
Certified Fund Specialist (CFS) - Planners advise clients on mutual funds, and may buy and sell funds for clients if they have the broker license from the NASD. Some CFS holders provide general financial planning services for clients as well.
Certified Public Accountant (CPA) - Those CPAs who specialize in taxes can help clients with tax planning and preparation. (Some CPAs may not deal with tax planning but instead focus on audits or accounting.) Unlike some other tax advisers, CPAs are authorized to represent clients before the IRS.
Enrolled Agent (EA) - Enrolled Agents are licensed by the IRS to represent clients before the agency during audits, hearings, or collection procedures. An EA may also provide tax-planning advice and tax-preparation services.

There are three main cost structures involved when seeking the services of a financial planner. These are:

Fee - Only Planners - are paid only for the advice they give, they do not earn commission by selling any financial products.
Fee - Based Planners - paid for advice and earn a commission on some of the financial products they sell like life insurance.
Commission - Based Planners - make money from the financial products that they sell.

Take into account that most financial planners will charge you 1 - 2% of your total assets. Fee - only planners will sometimes charge you a flat-fee or a retainer fee of average $500 per year. This flat-fee can actually be much cheeper so I would advise that rather use these planners than those that charge hourly rates. Hourly rates can be about $120 per hour and ofcourse this figure can be higher depending on how much of your money they will manage.

"I'd like to live as a poor man with lots of money. " - Pablo Picasso

Comments (4):

Stuart Says: I used a fee based financial planner and he has helped me a great deal | 06.7.2007 |

Wayne Says: I found it easier to plan my investments with the help of an RIA and it did cost quite a bit but I believe I'm getting the money back from my investments | 06.7.2007 |

Kyle Says: I am considering getting the services of a financial planner and this post is helpful. Thanks Kevin and I will take time to choose a good one | 06.7.2007 |

Melanie Says: I had to re-organize my business recently and I worked with a EA and she sorted my IRS troubles for me with no hassles and the cost was reasonable too | 06.7.2007 |

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