At various points in their lives, many people rely on the advice of a professional to make financial plans and decisions. Often this consultation is focused on a narrow area of their finances. Professional financial advisers, such as a family lawyer, tax preparer, insurance agent, credit counselor, or stockbroker, can be helpful. Too often these people are not impartial because they are salespeople for specific financial services. They typically want to sell you something rather than have your best interests at heart. People often find it helpful to obtain the services of more broadly qualified financial experts.
A financial planner is an investment professional who evaluates the personal finances of an individual or family and recommends strategies to set and achieve long-term financial goals. A good financial planner should be able to analyze a family’s total needs in such areas as investments, taxes, insurance, education goals, and retirement and pull all of the information together into a cohesive plan. The planner may help a client select and prioritize goals and then rearrange assets and liabilities to fit the client’s lifestyle, stage in the life cycle, and financial goals. When appropriate, planners should make referrals to outside advisers, such as attorneys, accountants, trust officers, real estate brokers, stockbrokers, and insurance agents. Effective financial advice helps you make better day-to-day financial decisions so you have more to spend, save, invest, and donate
You can check the background of the planner you are considering. Self-regulatory organizations and government agencies are available to help.
A financial planner is an investment professional who evaluates the personal finances of an individual or family and recommends strategies to set and achieve long-term financial goals. A good financial planner should be able to analyze a family’s total needs in such areas as investments, taxes, insurance, education goals, and retirement and pull all of the information together into a cohesive plan. The planner may help a client select and prioritize goals and then rearrange assets and liabilities to fit the client’s lifestyle, stage in the life cycle, and financial goals. When appropriate, planners should make referrals to outside advisers, such as attorneys, accountants, trust officers, real estate brokers, stockbrokers, and insurance agents. Effective financial advice helps you make better day-to-day financial decisions so you have more to spend, save, invest, and donate
You can check the background of the planner you are considering. Self-regulatory organizations and government agencies are available to help.
- The Certified Financial Planner Board of Standards [(888) 237-6275; www.cfp.net] assists those searching for a CFP as well as accepts complaints.
- The National Association of Insurance Commissioners [(816) 842-3600; www.naic .org] directs inquiries to the appropriate state agency where you can check on planners who also sell insurance products.
- Financial Industry Regulatory Authority (FINRA) [(800) 289-9999; www .finra.org] oversees securities brokers
The Securities and Exchange Commission [(800) 732-0330; www.sec.gov] regulates
investment advisers and all securities dealers
How Financial Planners Are Compensated Financial planners earn their income in one of four ways:
investment advisers and all securities dealers
How Financial Planners Are Compensated Financial planners earn their income in one of four ways:
- Commission-only financial planners/brokers live solely on the commissions they receive on the financial products (such as investments or insurance) they sell to their clients. In this case, the plan will be “free,” but a commission will be paid to the adviser by the source of the financial product, such as an insurance company or mutual fund. Advantage: Save money if you make only a few transactions.
- Fee-based financial planner/brokers charge an up-front fee for providing services and charge a commission on any securities trades or insurance purchases that they conduct on your behalf. Advantage: Unlimited consultations with broker.
- Fee-offset financial planners/brokers charge an annual or hourly fee. That fee will be reduced by any commissions earned off the purchase of financial products sold to the client. Advantage: Fee will be reduced as you trade investments.
- Fee-only financial planners earn no commissions and work solely on a fee-for-service basis—that is, they charge a specified fee (typically $50 to $200 per hour or 1 percent of the client’s assets annually) for the services provided. They usually need five or more one-hour appointments to analyze a client’s financial situation and to present a thorough plan.Fee-only planners do not sell financial products, such as
stocks or insurance. As a result and unlike other financial planners/brokers, they are not inclined to recommend products that earn them the highest commission. Finding a true fee-only financial planner is challenging. Advantage: Receive unbiased advice. Remember, it’s your money and your financial future. So when you use the services of a financial planner, don’t be intimidated. Ask the hardest questions and don’t leave the planner’s office until you understand the answers
.
0 comments:
Post a Comment