Choosing a Financial Professional

Don't make the mistake of choosing just any financial professional from the Internet. Your goal is to find a capable person in the financial services field who shares and respects your ideas for handling your money. It's a financial relationship you're forming.  Just remember that you're the party in control: This person should be working with you.

Begin by asking yourself just what you want a financial professional to do for you. You may want a comprehensive financial plan. Then you can choose whether to implement the plan yourself or to ask your financial professional to help you by coordinating the efforts of other professional advisors in putting your plan into action. Your financial professional can help you to select qualified professionals who can assist you in selecting mutual funds or annuities, buying stocks and bonds, or implementing other savings and investment choices.

Ask for referrals from people you trust: family members and friends, an accountant, lawyer, banker or insurance agent. Various financial associations can also provide you with the names of financial professionals in your area. You'll find a list of these organizations at the end of this article.

Qualifications and professional designations you should look for in a financial professional:

• Education. Don't be overly concerned if a financial professional has a degree in something other than finance or accounting, as long as the candidate has additional qualified training in financial services.
• State registration and licensing.   State insurance licenses and securities registrations are required to sell insurance and securities products. Check with your state insurance department and securities commission to determine if a financial professional is qualified and if any complaints have been filed. Check your state government website or your local telephone directory for contact information.
• Certified Financial Planner™ (CFP®). Financial professionals who have earned this designation have at least three years of personal financial planning experience, have completed a CFP Board registered program, have passed a final certification exam, and complete Continuing Education requirements.  The issuing organization is the Certified Financial Planner Board of Standards.
• Chartered Financial Consultant (ChFC). Financial professionals who have earned this designation have at least 3 years of full-time personal finance or insurance experience, have completed core and elective American College courses, have passed final exams for each course, and complete Continuing Education requirements. The American College in Bryn Mawr, PA is the issuing organization.
• Personal Finance Specialist (PFS). Financial professionals who have earned this designation are Certified Public Accountants who are members of the American Institute of Certified Public Accountants, meet experience, education and Continuing Professional Education requirements, and must substantiate business experience in personal financial planning-related services. The issuing organization is the American Institute of Certified Public Accountants.
• Chartered Life Underwriter (CLU). Financial professionals who have earned this designation have at least 3 years of full-time business experience, have completed core and elective American College courses, have passed final exams for each course, and complete Continuing Education requirements. The American College in Bryn Mawr, PA is the issuing organization.

Looking for appropriate professional credentials is a good starting point, but you'll also want to know about the person's experience. Narrow your list to several top candidates and set up an interview with each. Be sure to ask in advance if there will be a charge for this meeting. Prevent any misunderstandings by stating up front that you just want to find out more about the financial professional's training and experience when you meet.

Ask every candidate the same basic set of questions so you'll have comparable information to evaluate each. Here are some core questions you should cover.

• Are you registered as an Investment Advisor Representative?
• Are you licensed to sell life and health insurance products? 
• Are you licensed to sell securities, including variable products?
• Do you sell financial and insurance products for a specific company?
• How long have you been in practice?                                  
• Can you provide references?
• How are you compensated? Most financial professionals are compensated in one of the following ways:
  • Financial Planning Fee: Financial Planners charge either an hourly or fixed rate.
  • Management Fees: Investment Advisor Representatives who sell managed investment accounts receive fees based on a percentage of assets under management.
  • Commission-based sales. These financial professionals receive commissions on the financial products they sell,  which may include insurance, securities and variable products, etc.

During your interview, ask for references and a copy of the financial professional's resume, including education, professional training, business experience, and  professional designations. You can contact the issuing organization to check if the individual is a member in good standing.

A less tangible but still significant consideration is the more subjective issue of how you relate with a prospective financial professional. Does the person seem to have time for you, regardless of your financial situation? Does he or she listen to you and seem to respect your opinions? Does the person use financial jargon, or explain investments and insurance to you in clear terms?  Also research the financial professional's firm. If you choose a firm because of the qualifications of a particular financial professional, keep in mind that you may need to deal with other professionals at the firm in the future.

Once you've asked all your questions and chosen a financial professional, expect to have the tables turned. It will be your turn to answer questions. Your financial professional will need information about your stage of life and your financial goals, whether saving for a child's education or planning for retirement. You'll also need to be clear about your tolerance for risk, current financial situation, current and ongoing family responsibilities, retirement goals and other important financial issues.

Remember, it's your financial strategy and your financial future.

Plan to meet on a regularly scheduled basis with your financial professional to review your insurance and investments, the market and any changes in your financial goals. If you experience a major life event -- such as the birth of a child or the death of a spouse -- arrange for a special meeting with your financial professional. You will want to feel comfortable about your strategy to meet your financial needs and objectives every step of the way.