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Chapter 8. How to Choose a Financial Pla... > Questions to Ask and Points to Consi...

Questions to Ask and Points to Consider:

  1. Ask to see a sample of the planner’s work, such as an investment analysis or financial plan. The planner should provide concrete evidence of his/her competence and ability to deal with a vast array of financial situations.

  2. Ask what type of clientele the planner works with. It is common for planners to work within particular professional groups, income levels and/or age groups.

  3. Request a disclosure statement that provides details of the planner’s education, background, number of years experience, and areas of specialization. The size of the firm is not as important as the qualifications of the planner.

  4. Ask the planner to provide the names of clients who you may contact regarding the quality of service rendered.

  5. Ask to see credentials. Industry credentials such as Certified Financial Planner (CFP) and membership in the Registry of Financial Planning Practitioners (established by the IAFP) indicate a commitment to excellence. Either of these credentials identify practitioners with the education, experience and ethics considered necessary to perform their services professionally.

    To become a CFP, an individual must pass a six-part curriculum and have a minimum of three years of full-time experience of direct client contact.

    The standards for the Registry of Financial Planning Practitioners have been established by the IAFP and help the public identify financial planning practitioners who meet the standards essential to the practice of total financial planning. To be a Registry member, an individual must hold certain approved designations, certifications, or degrees and have a minimum of three years experience practicing total financial planning.

  6. Inquire if the planner is a member in good standing of the International Association for Financial Planning (IAFP) and the Institute of Certified Financial Planners (ICFP).

    • IAFP—has a broad-based membership that comes from many related disciplines: financial planners, accountants, attorneys, bankers, trust officers, representatives of the insurance, real estate and securities field, and suppliers of various financial products and services.

    • ICFP—only Certified Financial Planners can be members.

  7. Discuss the planner’s method of compensation, which may be:

    • Fees—Either an hourly rate or a flat charge for a specific period of time (such as one year). Fees are usually determined on a case-by-case basis.

    • Commissions—Generated from investment products placed through the planner.

    • Fees and Commissions—Those planners who are Registered Investment Advisors (RIA) may charge a fee as well as receive commissions.

  8. Ask questions. Learn as much as you can about the planner. This can initially be accomplished both by phone and during the introductory meeting.



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