By [1] Erik Braunitzer, and courtesy of [2] Douglas Elliman Real Estate Company, agents for [3] NYC Rentals.

There are several reasons to invest in a financial planner. Whether it is to buy a new home, securing a child’s college savings, or saving for retirement, there are a number of valid reasons to invest in a financial planner. When looking around for the right individual to suit your needs, there are several things to keep in mind. Although there may be any number of qualified professionals, not everyone will suit your individual needs; that is perfectly acceptable. Be sure to interview and communicate with several different financial planners before making a final decision. There are several things to consider when choosing a planner. 

Disciplinary Record: First and foremost, it is important to make sure the financial planner is honest and above board. Ask the potential planner if there has ever been disciplinary action. Action could have occurred for two reasons. One reason that a disciplinary measure could have occurred would be anything that was done illegally. The other reason a disciplinary measure would have happened is if anything was done unethically. These actions are not necessarily against the law; they just are not necessarily the most honest course of action in any given situation.

Experience: Find out the experience of the financial planner. Does this planner have experience in only a couple aspects or an overall rounded expertise level? For example, if you plan to hire a financial planner to take care of the IRAs and 401(k), you want someone who has experience with these types of funds. A financial planner who only has experience with college funds may not be the best fit for your needs.

Qualifications: To ensure that the individual is not using the term “financial planner” too liberally, ask the individual what credentials they hold. Many financial businesses tend to use the term “financial planner” too casually. An uneducated consumer may sign up for a service they may not have wanted. A certified financial planner (CFP) is regulated by a set of rules and regulations. They have to be licensed every couple of years.

Services: Find out what services are offered. Some financial planners may not offer the particular service needed. This tends to run in with the experience aspect. A particular financial planner may only offer retirement services and not the best way to save for a home. 

Who You Will Be Working With: Some financial planners are in a business by themselves; however, other professionals may be in an office with other partners. It is important to find out who you will be working with. Will it be only the individual being interviews or others as well? One way is not necessarily better than the other; it is usually just a matter of personal preference. By having only one person working with you, they will generally be a little more familiar with you and your finances. By having two or more professionals working on the finances, more opinions are expressed. Many times with finances, there is not a right or wrong way to invest money. Multiple financial planners may each have a different idea. This allows you to pick the option that you feel is best. 

Rates and Fees: It is important to know how much a financial planner is to be paid and how it will occur. There are several different ways a financial planner can be paid. An hourly fee could be charged, or a flat salary could be collected. Some planners are mostly commission based. This means any additional services that are sold to you are partially given to them. For example if a planner sells an additional service for $100.00, the planner may make $10.00 off of the sales. One innovative way to get paid is based on the total amount of assets that are invested. The more money is in the care of the financial planner, the higher the annual fee will be. Most commonly, a financial planner is paid from a combination of two or all three of these types of payments.

Any Other Beneficiaries: It is important to find out if any other person besides the financial planner has a special interest in sales or services offered to you. If there are special interests involved, there may be reason to question how ethical transactions may be. While special interests by no means question the honesty of the financial planner, there does leave large loopholes for an unethical transaction to occur. 

Get It on Paper: Any agreement struck up with a financial planner should be written down and signed by both parties. Keep this paper somewhere safe, such as a fireproof locked safe, for future reference. Should something go awry, it is necessary to have this paper for legal action. 

Personality: Each individual has a distinct personality. Even if the financial planner is highly acclaimed and has a spotless record, if they rub you the wrong way, keep looking. It is important to be able to like and trust your financial planner. 

Special Thanks to Erik for his article. If you would like to write a guest post, please email me at investors@strikerinvestors.com