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The cost of hiring a financial adviser

Finding a financial adviser is easy. Just look in the phone book. However, finding one that you can trust with your financial life takes a little more effort.

The ideal financial planner would be educated and capable, and would respect your ideas about handling money and risk. While this person may have more experience and knowledge about the financial world than you, the planner is hired by you.

By the way, finding someone to show you the path to riches and glory isn't cheap. Expect to spend at least a few hundred dollars for experienced advice on organizing and improving your financial situation.

Here are five steps to hiring a financial adviser:

1. Determine why you need a financial adviser.

Financial professionals can advise on taxes, estate planning, education planning, retirement planning, investments, real estate, insurance needs and more. Since most concentrate on a few areas, it's best to figure out exactly why you want to see a financial expert.

The three most common reasons folks hire a financial planner are approaching retirement, an IRA rollover or an unexpected windfall, according to the Certified Financial Planner Board of Standards.

"There's usually some triggering event [for folks to seek a financial planner]," says Alice Bullwinkle, a certified financial planner and owner of North Star Financial Direction in Lakewood, Colo. "Often their money has gotten so big, the bigness gets their attention. They say, 'I really need to get this right.' So they come to a financial planner."

2. Track down referrals.

Ask a lawyer, banker, insurance agent or accountant for recommendations. Also pick the brains of financially savvy friends or family members. Take seriously any advice you get from friends or family who have sought help with an economic situation like yours.

Finally, you can check these organizations for referrals in your area:

For info on the different kinds of financial advisers, read "Financial adviser titles."

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3. Interview prospective advisers.

Even if your best friend swears by a particular financial planner, you need to consider what's best for you. Think about your goals and needs, write up some questions ahead of time and interview at least three potential advisers. Make sure this initial consultation is free.

Whether you interview the financial pro by phone or in person, pay attention to whether the planner listens to your goals and willingness to take risks. You want to be comfortable with this person's knowledge, sincerity and financial philosophy. Ask plenty of questions.

"It's trust more than anything," advises Bullwinkle, who consults first by phone to make sure she is right for a potential client's needs and then meets in person so the potential client can get to know her.

4. Check backgrounds.

Once you've narrowed down your choices, dig a little deeper to make sure you have found someone trustworthy. See that the credentials of your potential adviser are up-to-date by checking with the appropriate certifying body.

If you want to be sure this financial professional is clean of legal snafus, check with the board of accountancy, insurance department, real estate commission or other relevant agencies in your state. For a securities broker, check the registration at the state's securities division or the Securities Exchange Commission.

5. Find out about billing.

Financial advisers make their money in different ways. Whichever method your adviser uses, get an estimate ahead of time and get it in writing.

Here are some examples of the costs of a financial adviser:

Bullwinkle first explains to the client the scope of their project, whether it ought to be a one-time deal or a long-term consultation. She then gives her estimate in hours. Her hourly rate is $150, which she admits might seem high. However, she has experience and a staff of workers that assist in projects, which add value to her services.

You need serious money to see Margaret Miller Welch, a CFP with Armstrong, Welch & McIntyre in Washington, D.C. High-income clients pay her $250 an hour during the planning process. Some of her associates charge a more modest $150. Welch says a basic plan can end up costing $3,000 to $4,000, but her clients require complicated planning with options, retirement and millions of dollars in investments. A complex plan can run as high as $20,000.

Pinning down rates for some planners is as difficult as pinning down the exact nature of your financial problem. The Bendix Financial Group in New York offers a free consultation like most planners. After that, the rates are on a case-by-case basis and are not always determined hourly.

Sampling of hourly rates of financial advisers



Average, according to the Certified Financial Planner Board of Standards


Alice Bullwinkle, CFP, Lakewood, Colo.

$150/hour, free first consultation (half hour)

Margaret Miller Welch, CFP, Washington, D.C.

$250/hour (associates charge $150/hour)

James Jenkins, CPA, Southfield, Mich.

$250/hour for tax planning and consultation

Tom Swift, registered investment adviser, San Francisco, Calif.

1 percent to 3 percent of total assets under management. Sometimes an hourly fee of $100 to $250.

Financial Adviser Ball (toy)

$6.95 at gifts24.com

-- Posted: March 21, 2000


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