Financial planning seems to be more important than ever these days. Few would have imagined the catastrophic changes that we are seeing all around us, the “too big to fail” failures and the highly publicized fraud cases. Many people and businesses have suffered lasting damage and understand that their definition of security has changed almost overnight. Against this backdrop, the selection of a financial planner takes on additional urgency and must be approached with some care, if we are to avoid some of the pitfalls and past performance horrors that are all too fresh in our minds.
Many make the mistake of looking at a designation, those three or four letters after the professional’s name, assuming that their very presence is enough. Nothing could be further from the truth and we need to understand that there are many different qualifications and “horses for courses.” Make sure that your professional is best qualified to help you with your primary goal, to start off with. Further than that, though, you do need to choose an advisor who is able to help you view the bigger picture. Is he or she able to work with other professionals, such as life insurance agents or attorneys to pull together your plan? Often financial planning is more about life planning, and individual elements cannot be viewed in a vacuum.
Try and select a financial advisor who most closely mirrors your situation insofar as experience, track record, understanding and ability are concerned. You really need a financial coach to help you build a plan or indeed to help you resurrect your damaged dreams. You will need advice on taxation, insurance and money management.
It is important to understand the professional’s fee structure before you start as there is a big divergence. While some opt to charge a quoted fee, others will suggest a percentage of the asset value covered and some might earn commissions from the financial products that they initiate and manage. Be aware of this latter option and seek for clarity to unearth any potential clash of interests.
Thousands of people have lost a sizeable part of their assets due to their involvement with professionals who have subsequently been charged with fraudulent activity and have achieved notoriety in doing so. Your due diligence will include a lot of research, the gathering of testimonials and the checking of references. It is fairly easy these days to find out if any ethics actions have being taken against a professional by contacting the relevant board, or by just doing a targeted Internet search. Once you have asked all your questions and completed all your research, make sure that you have a very frank discussion with your financial planner and confirm everything in writing before you agree to move forward.
Adam Toren
