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Taking Charge of Your Financial Planning

Article 7 – Reviewing your financial progress (Part 4)

Continued from…

Sizing up financial planners

How do you know if the financial planner you have chosen to use is qualified and responsive to your individual needs? Unfortunately, finding the exact planner you need may be tedious. It is hard to know in advance; choosing carefully is a great way to start. One way to hedge your bets is to begin by considering planners who are accredited by one or more of the standard professional organizations. There are four main types of planner credentials: Personal Financial Specialists (PFS), Certified Financial Planners (CFP), Chartered Financial Planners (ChFC), and Masters of Science in Financial Services (MSFS).

Personal Financial Planners

These financial planners are CPAs who have taken the additional steps of preparing for and passing a rigorous, comprehensive financial planning exam administered by the American Institute of Certified Public Accountants. These planners must also get recommendations from their clients and from other financial advisors, and have a minimum of three year’s financial planning experience, including a minimum of 500 hours per year in financial planning.

Certified Financial Planners

These are financial planners with the CFP credential and they may have taken courses and have passed 5 exams administered by the Institute of certified Financial Planners. They have at least three years of work experience, and have a continuing education requirement each and every year.

Chartered Financial Consultants

The ChFC credential results from a ten-course sequence during a 2-4 year period of time for study; 2-hour exams are required at the conclusion of each of these courses as well.

Masters of Science in Financial Services  

The MSFS credential follows a 40 hour course work study and a 2 week residency at the American College in Bryn Mawr, Pennsylvania. This college also grants the ChFC credential.

In addition to choosing a planner that has the right credentials for your specific financial planning needs, you should also consider the following aspects of financial planners’ backgrounds: Experience, access to experts, and fees and commissions.

Experience

Consider how long your potential planner has worked for clients with your exact needs. Even the most heavily credentialed planner needs to have a few years of work experience in the field pertinent to your questions and considerations. Some planners specialize, so be sure they are specializing in what you are actually looking for.

Access to experts

In a complex and fast changing field, no one can maintain complete knowledge of all aspects of personal finance. A planner should then be willing and completely able to consult with colleagues on matters affecting your financial future.

Fees and commissions

As in other fields, fees for financial planning will vary from service to service and from company to company. You should clarify in advance what services you will receive and at what exact cost to you. Consider the possibility of shopping around. Do phone interviews if you can. Try an in person interview as they are many times free of charge (but not lengthy meetings). It is well worth your time to save money in the long run.

A couple of situations that may require you to become concerned as you are choosing a planner would be – if you felt that the interview was canned, if the planner’s recommendations involved buying products that the planners’ own company sponsored, or if the planner was new to the field.

Lastly, be sure to remember that even if you end up hiring a professional to aid your financial planning, the arrangement you come to terms with will only work if you put the required effort into it.

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