Tips for Hiring a Financial Planner

Saving money is more difficult than opening a savings account at the local bank. There are stocks, individual retirement accounts (IRAs), 401(k)s, and Thrift Savings Plans (TSPs). It's also hard to know how much money to contribute. But with the help of a certified financial planner, saving money doesn't have to be a headache.

The first step to finding a financial planner is to determine whether this professional is fee-based, commission-based, or fee-based with a commission. For example, a financial planner that has a fee-based practice makes a commission on the financial products he sells to their clients. Some planners offset the commissions earned against a flat fee and others work on commissions alone, according to Bankrate.com. However, there are some financial professionals that charge a set amount or an hourly fee.

Once the fee-structure is established, ask the financial planner if he requires his clients to have a minimum investment amount. For instance, some clients must have $100,000 or more to invest before a financial planner does business with them (the minimum varies among financial planners.)

If the minimum is affordable, offer to set up three meetings with the prospective financial planner. These meetings — which most planners don't charge for — should determine if the client and planner are good for each other. Meeting with the financial planner can also give the client a chance to research the planner's background. In fact, it is acceptable to ask the financial planner about his qualifications and education.

If the financial planner "fits the bill," he should offer to do the following for his client:

  • Assess the current financial situation by reviewing the last two tax returns, all income sources, liquid and illiquid assets, wills, insurance policies, and estate and retirement planning documents
  • Identify financial needs and goals
  • Develop a financial plan
  • Explain the pros and cons of various options and financial instruments (stocks, bonds, mutual funds, IRAs, etc.)
  • Advise you in identifying other professionals (investment brokers, lawyers, accountants) to execute your plan
  • Review progress periodically to make sure the plan remains on track.
  • Help potential investors become financially literate, which will help clients better understand their finances.

Working with a financial professional is the best way for clients to build wealth and save for important events -- such as retirement or college. Servicemembers interested in this service should check with the Department of Defense or the Veteran's Career Network at Military.com for more information.

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