Anyone with a fair amount of money can benefit from a good financial planner. After all, they are professionals trained to assess your financial life and recommend strategies for keeping and growing your money- not brokers who are just selling financial products for a commission. Financial planners are easy to find- but finding the right one for you requires some legwork. You should expect to interview a few candidates before you find the right one for the right price. Follow these 3 golden rules for interviewing a financial planner and you can't go wrong.
1. Do Your Homework. What do you need from a Financial Planner? What are you willing to do yourself, and what do you want the planner to do? Communication is a two-way street: make clear your expectations and you'll do a much better job of extracting the information you need during the interview session. The more you can say about your expectations, your needs and what part you'd like to have in the management of your money, the more specific a financial planner can be about his or her pricing system.
For example, do you want to invest your funds yourself or leave it to the financial planner to decide? You may know that you want to invest in certain stocks or bonds, but the planner can help you decide how much of your assets to put into the stock market and how much to put elsewhere. If you like the investing part and want to do it yourself, you may want to choose a financial planner who charges by the hour, since you're doing part of the "work" anyway.
2. Find Out Exactly What's Offered and for How Much. Does he or she offer just investment advice, or does the planner also offer estate planning? How about your taxes- some will do your taxes too. What's offered varies widely, and so do the fee structures. They can charge by the hour, and some charge a fixed fee, say an annual fee. Others may charge based on how much money they're managing: it's called asset-based fees. They are a better option if you need all-encompassing services on a long-term basis. You may already have lots of investments all over, with different investment companies. He or she can manage it for you- but make sure to find out how often you get those services. Will you work with the planner or a team of planners?
3. Interview the Person, Not Just the Planner. While it's important to get the facts straight: how they charge and what's covered, it's also important to see the person behind the facts, too. You are interviewing someone with whom you may develop a lasting relationship. Try and assess the "trustworthiness". Ask yourself the following questions:
- Does the candidate seem interested in learning about you, too? They should, since in order to manage your money they'll need to know what type of investor you are.
- Does he or she make "guarantees" about investment returns? This is a warning sign, since there are no guarantees in this business.
Most importantly, you should feel comfortable with your financial planner. You hope to find someone you can trust and work with for a very long time, so be selective and follow these golden rules.