Financial Literacy - Financial tuneup
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Finding a financial planner

3. Do a background check

Different financial advisers must abide by different ethical standards. For instance, registered investment advisers, who typically buy and sell stocks for clients, must act solely in their best interests. This is generally regarded as the highest fiduciary standard in the industry. Overseen by the Securities and Exchange Commission, investment advisers must file Form ADV if they manage more than $25 million in assets. Advisers that manage less than that must register with the state securities regulator where the adviser's principal place of business is located. Form ADV discloses information about any disciplinary actions taken against the adviser, as well as data about services and fees.

Brokers, who are regulated by the Financial Industry Regulatory Authority, or FINRA, must adhere to a looser "suitability standard," rather than the stricter fiduciary standard. It simply means that brokers must choose products that are suitable for their clients based on age, goals and risk tolerance. On the FINRA site you can conduct a background check on brokers.

The SEC's Central Registration Depository lists any disciplinary actions taken against brokers and advisers, as well as the firms for which they work. Another good source is the North American Securities Administrators Association, an organization comprising consumer groups, state securities regulators and investment providers dedicated to investor protections. The NASAA published a guide about investment professionals called "Cutting through the confusion" that's worth reviewing.

The Certified Financial Planner Board of Standards conducts investigations of complaints filed against Certified Financial Planners and lists any disciplinary actions taken on its Web site.

4. Interview several planners

The key in choosing a financial adviser is in finding one who will work to identify your goals and needs and recommend a range of financial products to meet those goals and needs. A stock broker, for example, may not focus enough on your insurance needs, while an insurance agent may focus too much on those needs.

Find the best fit by interviewing several advisers.

Ask key questions. When interviewing advisers, find out what professional designation(s) they hold and learn what it took to earn that designation. Of course, designations alone don't translate to sound financial advice, so make sure to get references. Always ask for a work history, credentials, education and even possibly a client list. Use this work sheet as a guide.
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