What is a Financial Planner?

August 21st, 2009 by Mike

A financial planner is a professional who maps out a strategy to help you meet your financial goals. There is a wide variety of products and services offered in this industry. Some financial planners are specialists with a narrow focus and others may offer broad-based, comprehensive plans that cover the entire gamut of investments. Be prepared to divulge a lot of personal information concerning your savings, taxes, investments, insurance, retirement and estate planning.

There are many types of financial planners and their expertise is just as varied. Your selection is critical. Mike Tyson and Evander Holyfield made millions during their professional careers and both ended up in bankruptcy. A fee based planner must be a Registered Investment Advisor and must function as a fiduciary. Unlike a broker, this standard mandates that the financial planner work in your best interest.

Before you choose a financial planner do your homework and educate your self as much as possible. You don’t want to be sitting down with your prospective agent while he blithely uses technical jargon and financial terms that leave you dazed and confused. Those who blindly trust slick professionals with their silver-tongued glibness are the clients such as Hollywood celebrities we read about in the newspaper who get taken to the cleaners.

There are several key questions that should be answered and a few actions that should be performed before you make a decision. Ask the person you are considering the depth and range of their experience. Find out what qualifications and certifications they have and investigate their veracity yourself. Determine whether this person is a cautious or an aggressive investor. A risky investment is more like gambling in which case you can go to Las Vegas and have a riot while you are gaining or losing money without paying anyone. If you are designing a broad-based financial plan, then it is more than likely that other professionals will be involved. Discover who they are and investigate them too. You may feel uncomfortable, but you should ask if your potential planner has had any disciplinary, ethics, or unlawful charges brought against their person.

By decision time, you should feel that you have established a good rapport. In the final phase make sure that all aspects of your financial plan and agreed strategy are put down in writing. If you are given bad advice you will have a foundation for legal recourse.