When you’re shopping around for someone to trust with your money, you are bound to be showered with positive messages in reference to a squeaky clean record.
Liz Pulliam Weston is one of the most-read personal finance columnists on the Internet. She appears on MSN Money each Monday and Thursday to offer her advice on responsible finances. Mrs. Weston put together a list that details what exactly your financial planner is leaving out from his portfolio, and how to get the answers you need.
“I’m not even qualified for this.”- I could easily walk around downtown and tell people that I’m a nun or a supermodel: there are no education, experience or ethical requirements, and unfortunately, no government agency that regulates financial planners. Liz Pulliam Weston states that “Out of the estimated 250,000 people calling themselves financial planners, only about 40,000 have earned the Certified Financial Planner mark — the best-known financial planning designation. Fewer still are Chartered Financial Consultants (ChFCs) or Personal Financial Specialists (PFS’s), the financial planning designations offered by the insurance and accounting industries, respectively.” Even if the designations give you a thumbs-up, it normally takes many years of experience and ongoing education to become a sound financial planner.
At the least, check the Certified Financial Planner status by referring to the Certified Financial Planner board of Standards. Or, to check to see if your planner is a registered Personal Financial Specialist, get in touch with the Institute of Certified Public Accountants’ Personal Financial Division. Finally, to confirm ChFC status, check with the Society of Financial Services Professionals. Do your homework: it is always better to be proactive than reactive.
“My past isn’t so great.”- Unhappy clients are bound to happen to even the most professional financial planner. Just because a planner has experienced a few blips with delivered results, it’s no reason to panic. Records of lawsuits and disciplinary action are where you need be concerned. Repeat offenders will jump from town to industry to companies hoping the past does not catch up with them.
To protect yourself, read the ADV form, which holds disciplinary histories. You can comb public records online or at the courthouse to see if any lawsuits have been filed against your adviser. You can even contact your state’s insurance department or securities regulators or even the National Associate of Securities Dealers to check for other disciplinary actions.
“I don’t know what I’m looking at.”- “A good financial planner looks at every aspect of their clients’ financial situations, from their budgets to their estate plans,” says Liz. “Many of those calling themselves financial planners, however, focus on one narrow aspect of a client’s monetary condition; usually the area that corresponds with whatever financial training they’ve received.” Solely being concerned with income, assets or other areas should send up a red flag that it’s time to look elsewhere. There’s nothing wrong with getting a second opinion, especially when it has to do with your present and, possibility, future financial well-being. A good financial planner will evaluate your entire financial picture as a whole and how they relate to one another.