First, is the consultant experienced? Ask about how many years he has been in business, what has been the nature of his practice and the types of problems he has solved, his existing clients, and the breadth and depth of experience. You may not think your issues are complex, but you are likely not aware of some of the strategies that could benefit you most, nor are they be understood by a novice. For example, it may take years of apprenticing to be ready to address the myriad issues facing seniors, so don't be someone's guinea pig. This is especially true in the area of tax and estate planning, where many novices present public seminars with only a basic understanding of complex issues.
Second, what is your advisors educational background? You'll want to look for genuine credentials such as Chartered Financial Consultant, Certified Financial Planner, Certified Public Accountant, Certified Life Underwriter, Juris Doctor, or other legitimate credentials. These indicate an educational background in finance, business, insurance, law, accounting, etc. and require years of experience and/or comprehensive examinations from accredited institutions. Beware of quickie course designations such as the CSA, which only require a two-day course and minimal knowledge of planning topics.
Third, does the advisor have a commitment to high ethical standards? Look for membership in at least one industry association (such as NAIFA, Society of FSP, FPA, IBCFP, etc.) that enforces a code of ethics. Of particular concern in ethics are those that not-so-subtly use their church affiliation in advertising.
Fourth, is the advisor diligent in their continuing education? In an increasing regulated and governed environment, laws are constantly changing, and the economy is always in motion. Are they keeping up with current laws, and keeping on top of changes that affect their clientele? What level of study do they pursue (basic, intermediate, or advanced)?
Fifth, does the advisor handle the services you need? Consider whether you need comprehensive financial planning, tax planning, or investment advice. Will you need help with securities, or simply need someone to give tax advice? Is the planner simply an insurance salesman? Find the consultant that specializes in the services that you need.
Sixth, is your advisor a solo-practitioner? Or is your advisor part of a team that he can turn to for strategizing on complex issues? Or to bring an additional perspective? Is his firm large enough to provide the extensive resources as a large firm of pros?
Seventh, what is their clientele like? You want to find a financial planner that handles similar clients to yourself. If you have a net worth of $200,000, but your advisor primarily handles people with a net worth of $5 million and up, are you going to receive the attention that you deserve? Are there other advisors with the firm that may be better suited to your situation? Does the advisor have a particular age demographic, or preferred client type?
Eighth, how is the advisor compensated? Is he/she paid by fees only, commissions, or both? More about planner compensation in an upcoming article.
Finally, is your advisor a professional? Be wary of persons who are merely part-timers working out of the trunk of their car, lack membership in professional societies, omit commitment to continuing professional education, and criticize others who do commit to high standards. Often they will downplay the need for education, or boast they "know more about estate planning than most attorney's out there." Smooth salespeople are often very charming, and may even present a charismatic public seminar-but they may also be dangerous because they don't know what they don't know.
Second, what is your advisors educational background? You'll want to look for genuine credentials such as Chartered Financial Consultant, Certified Financial Planner, Certified Public Accountant, Certified Life Underwriter, Juris Doctor, or other legitimate credentials. These indicate an educational background in finance, business, insurance, law, accounting, etc. and require years of experience and/or comprehensive examinations from accredited institutions. Beware of quickie course designations such as the CSA, which only require a two-day course and minimal knowledge of planning topics.
Third, does the advisor have a commitment to high ethical standards? Look for membership in at least one industry association (such as NAIFA, Society of FSP, FPA, IBCFP, etc.) that enforces a code of ethics. Of particular concern in ethics are those that not-so-subtly use their church affiliation in advertising.
Fourth, is the advisor diligent in their continuing education? In an increasing regulated and governed environment, laws are constantly changing, and the economy is always in motion. Are they keeping up with current laws, and keeping on top of changes that affect their clientele? What level of study do they pursue (basic, intermediate, or advanced)?
Fifth, does the advisor handle the services you need? Consider whether you need comprehensive financial planning, tax planning, or investment advice. Will you need help with securities, or simply need someone to give tax advice? Is the planner simply an insurance salesman? Find the consultant that specializes in the services that you need.
Sixth, is your advisor a solo-practitioner? Or is your advisor part of a team that he can turn to for strategizing on complex issues? Or to bring an additional perspective? Is his firm large enough to provide the extensive resources as a large firm of pros?
Seventh, what is their clientele like? You want to find a financial planner that handles similar clients to yourself. If you have a net worth of $200,000, but your advisor primarily handles people with a net worth of $5 million and up, are you going to receive the attention that you deserve? Are there other advisors with the firm that may be better suited to your situation? Does the advisor have a particular age demographic, or preferred client type?
Eighth, how is the advisor compensated? Is he/she paid by fees only, commissions, or both? More about planner compensation in an upcoming article.
Finally, is your advisor a professional? Be wary of persons who are merely part-timers working out of the trunk of their car, lack membership in professional societies, omit commitment to continuing professional education, and criticize others who do commit to high standards. Often they will downplay the need for education, or boast they "know more about estate planning than most attorney's out there." Smooth salespeople are often very charming, and may even present a charismatic public seminar-but they may also be dangerous because they don't know what they don't know.
About the Author:
Hank Brock is president of Brock and Associates, LLC, a firm specializing in retirement, estate, tax, and business planning. Be sure to check out Hank's article on finding a financial advisor for more extensive information.
