Suggestions
for choosing a financial planner, adviser or
counselor
by
Keith Rawlinson Volunteer
Financial Counselor
There
are a lot of people available to assist
those with financial questions. Some are very good at what
they
do and have special training, but unfortunately some have little or no
training and their advice may get you into trouble. As you
talk
to various ones,
you will find that the
opinions, suggestions and advice they each offer can be quite different
from one to the next. Sometimes these differences of opinion
can become very confusing to someone trying to find a financial
planner, adviser or counselor. To help sort it all out, here
are some practical suggestions for trying to find the financial
planner, adviser or counselor who is right for you.
Make sure you see eye to eye First
of all, make sure the financial person you are considering agrees
with any strong morel and/or ethical beliefs you may have in your life.
For example, if you are a born-again Christian make sure that the
financial person
you are considering is basing his or her opinions and suggestions on biblical principles.
Do they walk their talk? Find
out if the financial
person you are considering is “practicing what they
preach.” In other words, are they applying to their
own finances the same suggestions that they are giving you?
Be very, very careful if you are considering someone who tells you to
do something different than what they would be willing to do with their own
money.
Do
you want to be like them? Find out
what their general finances are
like. You may feel that asking is impolite, but it is
perfectly acceptable to ask. In fact, if the financial person
you are considering is unwilling to answer questions about their own
financial successes or failures, that should immediately put you on
your guard. If you are traveling, you would not ask directions to your
destination from someone who does not know how to get there themselves;
well, the same applies to your finances. Do not take
financial advice from someone unless you would like your finances
handled the same way they are handling theirs--there is no way to know that if
you do not ask.
A gut feeling As
you talk with a prospective
financial person, ask yourself if you feel comfortable with their
philosophies about saving, investing, budgeting and spending.
Does what they are saying to you sound right to you? Do you
agree with their perspective on life and finances? Are their
goals for your finances and your future the same as yours? If
you do not have complete
peace-of-mind, or if you get a "funny feeling" about doing what they
are suggesting,
then you should look elsewhere for financial advice.
Mumbo Jumbo? Can
they explain things in a way that you can understand? It
is bad financial planning to invest in things you do not
understand. Do not just take the word of any financial
adviser that their ideas about saving and investing are good
ones. Always make them explain things to you. If
you want to follow a particular financial strategy or investment, make
sure you completely understand and research it before you put any money into
it. If your adviser cannot make you understand a particular
investment or financial strategy, then look for another investment or
strategy that you can
understand. If it seems like you never
totally understand the strategies and investments suggested by a
particular financial adviser, then look for another adviser.
Too risky? Make
sure that you are willing to accept the level of risk your adviser
is suggesting. Too often, financial advisers are willing to
take more risks with someone else’s money than they would
take with their own. Higher risk investments as a small percentage
of your portfolio is fine, but beware of someone who mostly
suggests the highest return investments. Remember, with the
potential for higher return comes higher risk--you could lose
everything.
Looking out for themselves
instead of for you! Beware of
“churning.” Churning is when a financial
person attempts to generate more commissions for him or herself by
buying and selling far too often in your account. Most good
investments need to ‘sit’ for a while. If
your financial person is changing investments more than once or twice
per year, or selling most of them in a short amount of time and buying
new ones, watch out--they may be churning your account to generate more
commissions for themselves.
How much? Find
out ahead of time what the help will cost you. Not just upfront fees,
but also commissions, percentages, maintenance costs, interest charges,
etc. If the help is free, then make sure you ask them why and
make sure the answer makes good sense. If the advise is not
free
and the person is providing their advice for a living, then
somewhere along the line they have to be making a profit--make sure you
understand how they make their money. Be sure to shop around
to
make certain that any fees, expenses or commissions are comparable to
what other similar planners, advisers or counselors in your area are
charging.
These are not the
only considerations when
choosing a financial planner, adviser or counselor; but are very
important nonetheless. If you ignore these suggestions when
choosing planners, advisers or counselors, it is very likely that
problems will arise later, or that you won't accomplish as much as you
could have if you had found the right person for you.
Remember,
no one cares about your money as much as you do!