Hiring a financial planner is no small decision, and not one to be taken lightly. There are many things to consider, and many pitfalls to avoid, so you need to choose carefully. Finding a planner who puts your interests first can put you on the road to a secure financial future. Choosing a financial planner who thinks only of his or her commissions can put your financial future at risk.
Before you even start looking for a financial planner, take the time to write down some important questions. Getting answers to these vital questions should be a major part of the interview process for each financial planner you are considering. How the planner answers those questions will in large part determine which financial planner deserves to get your business.
How Are You Compensated?
This is perhaps the most important question of all, since the answer will determine whether or not your f.p. has a conflict of interest. Fee only financial planners are compensated solely by their clients (that's you). They derive no income from the investments they recommend, and they get no commission when you purchase a particular mutual fund, annuity or stock.
That independence allows fee only financial advisors to provide impartial advice, since they are paid the same regardless of which investments you select. Commission based f.p., on the other hand, derive their income solely from the investments they recommend. It does not take a financial genius to recognize the inherent conflict of interest with this arrangement. While a commission based financial planner can provide solid advice, it is important for clients to understand the potential for abuse.
Fee based financial planners combine elements of fee only planners with elements of commission based planners. Like commission based planners, fee based planners derive income from commissions on the products they recommend. And like fee only planners, they are paid by their clients. Fee based financial planners therefore have the same potential for conflict of interest as their commission only counterparts.
How Long Have You Been in Business?
This is an important questions, since the financial planner you choose will need to be able to steer your financial future through both good times and bad. A financial planner who has never ridden out a bear market might panic and sell at the bottom, while a more experienced planner will recognize that bear markets are par for the course in the financial world.
You might also want to delve into the background and education of your potential financial planner, since both can have a profound impact on the quality of advice and the level of service you receive. An advisor who graduated with honors from a top school should be able to provide excellent advice and guidance, while one who just squeaked by in a lower tier school might not be as competent.
What Services Do You Provide?
When you first seek out the help of a f.p., you might be looking strictly at investment advice and guidance. But as your wealth grows and your financial situation becomes more complex, you might need a more comprehensive set of services. Choosing a financial planner who can also provide tax advice and estate planning services will make it easier to keep your finances under control as you move down the road to financial freedom and retirement.
Are You Properly Licensed by the Federal and State Government?
Planners need to register with a variety of state and Federal agencies, so it is important to check the registration status of every financial planner you interview. Each state has a different set of licensing laws and disclosure requirements, so you will need to check the requirements in your own state and make sure the firm you are considering is properly registered and licensed.
You will also need to make sure that there are no outstanding complaints or charges against the firm. Each state keeps its own database of disciplinary actions against financial firms, and checking that database is essential as you shop. Your state can also help you search the relevant Federal databases to make sure you have found a planner you can trust with your finances and your future.
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Article Source: http://EzineArticles.com/?expert=Jelena_Brokowitch
Before you even start looking for a financial planner, take the time to write down some important questions. Getting answers to these vital questions should be a major part of the interview process for each financial planner you are considering. How the planner answers those questions will in large part determine which financial planner deserves to get your business.
How Are You Compensated?
This is perhaps the most important question of all, since the answer will determine whether or not your f.p. has a conflict of interest. Fee only financial planners are compensated solely by their clients (that's you). They derive no income from the investments they recommend, and they get no commission when you purchase a particular mutual fund, annuity or stock.
That independence allows fee only financial advisors to provide impartial advice, since they are paid the same regardless of which investments you select. Commission based f.p., on the other hand, derive their income solely from the investments they recommend. It does not take a financial genius to recognize the inherent conflict of interest with this arrangement. While a commission based financial planner can provide solid advice, it is important for clients to understand the potential for abuse.
Fee based financial planners combine elements of fee only planners with elements of commission based planners. Like commission based planners, fee based planners derive income from commissions on the products they recommend. And like fee only planners, they are paid by their clients. Fee based financial planners therefore have the same potential for conflict of interest as their commission only counterparts.
How Long Have You Been in Business?
This is an important questions, since the financial planner you choose will need to be able to steer your financial future through both good times and bad. A financial planner who has never ridden out a bear market might panic and sell at the bottom, while a more experienced planner will recognize that bear markets are par for the course in the financial world.
You might also want to delve into the background and education of your potential financial planner, since both can have a profound impact on the quality of advice and the level of service you receive. An advisor who graduated with honors from a top school should be able to provide excellent advice and guidance, while one who just squeaked by in a lower tier school might not be as competent.
What Services Do You Provide?
When you first seek out the help of a f.p., you might be looking strictly at investment advice and guidance. But as your wealth grows and your financial situation becomes more complex, you might need a more comprehensive set of services. Choosing a financial planner who can also provide tax advice and estate planning services will make it easier to keep your finances under control as you move down the road to financial freedom and retirement.
Are You Properly Licensed by the Federal and State Government?
Planners need to register with a variety of state and Federal agencies, so it is important to check the registration status of every financial planner you interview. Each state has a different set of licensing laws and disclosure requirements, so you will need to check the requirements in your own state and make sure the firm you are considering is properly registered and licensed.
You will also need to make sure that there are no outstanding complaints or charges against the firm. Each state keeps its own database of disciplinary actions against financial firms, and checking that database is essential as you shop. Your state can also help you search the relevant Federal databases to make sure you have found a planner you can trust with your finances and your future.
Internet business from AdSense website - site about Google AdSense money.
Article Source: http://EzineArticles.com/?expert=Jelena_Brokowitch