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Finding A Financial Planner

Chris Farrell Jun 12, 2008

Oops. I wrote the Q & A yesterday, but I forgot to post it. Sorry about that. I’ll put up two Q & As today. Thanks.

Question: We are currently searching for a reliable and honest financial planner, but we don’t know how to go about finding such a person? What particular criteria should we use for finding such a person? We would like to know what types of fees we should expect to pay for 1) estate planning, 2) setting up a trust fund and a 3) LLC? If you could provide me with specific fee amounts I would most appreciate it. Are there some Books or Websites that you could recommend for us to gain more practical knowledge about these matters? Thank you very much. Paymaan, Alexandra, VA

Answer: Ross Levin is one of the nation’s top financial planners. Several years ago he sent me a tip sheet on finding a good financial planner. I’m passing along his insights:

Understand your needs:

A) What is the triggering event that makes you feel you need a planner? Are you changing jobs, inheriting money, or do you just feel like you want more financial controls in your life?

B) What type of person will you feel most comfortable with discussing issues that are very personal for you? A good financial planner will spend a lot of time trying to understand you; you need to make sure that you are comfortable with the personality of the professional.

C) What would have changed in one year with your financial life if you were working successfully with a planner? Would you have drafted a will? Would you have saved tax dollars? Would you feel more comfortable with your investment philosophy?

Must Have’s with a Planner:

A) Your planner needs to have a Certified Financial Planner designation. This indicates that your planner has experience, education, passed an examination, and is required to adhere to a code of ethics.

B) Look for a fee-based planner. While there are good planners that charge commissions for their services, it is usually best to pay the planner a fee directly, rather than have him or her earn their living off of commissions. There simply won’t be as many conflicts of interest.

C) Find out if the planner’s practice involves many people with situations similar to your own. Ask specifically to talk to some clients who the planner feels were in similar situations.

D) Ask for the SEC form ADV. This tells you about a planner’s philosophy, experience, and regulatory history.

E) Have the planner clearly lay out what they expect from the relationship. Be sure to find out what type of planning they do. Some planners give out big books filled with analysis. Other planners are more organic. Neither is better than the other, but you need to know what to expect.

Where to Start:

A) The best place to start is with your friends and colleagues. Try to be specific with the regarding what you are looking for. Ask them to be specific with you about what they like about their planner.

B) If you have advisors who are not in the business of financial planning, ask them for recommendations. This is getting more difficult because more and more people are getting into the field.

C) If all else fails, call the Financial Planning Association. Their phone number is 800-322-4237. They will furnish you a list of planners in your area. It is still better for you to find a planner through a referral, though.

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