Finding the Right Financial Advisors

Here are ground rules for selecting and working with a financial adviser.

At some point in the financial planning process, you will need to rely on the assistance of a financial services provider, if only to buy the savings or investment products to implement your plan.

Here are a few tips to guide your selection:

First, decide to what degree you want advice - either in developing a financial plan or in choosing the products to implement that plan.

If you expect to do your own planning and make your own product. selections, your choice of providers will be determined by the availability of the products you want and the cost of those products. Take advantage of the lower prices offered by discount brokers and no-load mutual funds.

If you want help either with planning or in selecting products, a variety of financial services providers are available to help you, but your selection process will be more complicated. (For more information on the various types of financial services providers and the services they offer, see the chart below.)

Look for competent, honest professionals who gives sound advice at an affordable price.

Get references from friends, family members and co-workers. Look for someone with strong educational background and experience, including experience dealing with clients whose circumstances are similar to yours.

Call your state securities regulator or the National Association of Securities Dealers to check on the registration status and disciplinary history of securities industry professionals. (For the number of your state securities division, call the North American Securities Administrators Association at 1-202-737-0900. The NASD hotline is 1-800-289-9999.)

Avoid individuals who are not properly registered or who have a serious infraction in their past, such as churning, unsuitable recommendations, or unauthorized trades.

Once you have narrowed your selection, it is a good idea to interview two or three candidates. Ask about their experience and background, what services they offer, how they deal with clients, and how they are compensated.

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When financial advisers earn some or all of their money selling products to implement their recommendations, this creates a conflict between your interest in developing least-cost strategies to achieve your financial goals and the providers need to generate commission income for his or her practice.

Not all those who operate with this conflict give biased advice. However, if you choose to work with an adviser who also sells products, you should take special care to determine whether it is affecting your adviser's recommendations. Look for one who is willing to fully disclose commissions up-front.

Also, be sure you understand at the outset what the advice is likely to cost, including the costs to implement recommendations.

Commission-only advisers or those who charge a low initial fee can look like a bargain until you see what you'll pay in commissions implementing the plan. In contrast, many fee-only planners charge relatively high fees, but they often can save you enough money implementing your plan to more than make up the difference. If you are looking for unsecured personal loans then this company can help you secure a loan with good or bad credit.

If you do choose to rely on a salesperson for advice, even if it is just help in selecting the best products, look for one who is interested in understanding your financial goals and attitudes and who can explain how his or her recommendations fit into your overall plan.

Avoid salespeople who immediately start recommending products without asking about your financial goals and personal situation.

Also, check up on your adviser's recommendations. Use personal finance books and magazine articles to learn more about the products being recommended to make sure they fit your goals and risk tolerance.

Ultimately, no matter how good your adviser is, it's your responsibility to protect your own interests.

This website provides only a general overview of estate planning. You should consult an attorney, or perhaps a CPA or tax advisor for additional guidance.

Copyright 2005 by Estate and Retirement Planning
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