The cost of hiring
a financial adviser
Cynthia E. Brodrick
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
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
"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,
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
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
"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
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
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
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,
1 percent to 3 percent of total assets under management.
Sometimes an hourly fee of $100 to $250.
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-- Posted: March 21, 2000