| Financial planners:
not just for millionaires anymore |
| By Jay
MacDonald • Bankrate.com |
|
Got a headache? See your doctor.
A toothache? See your dentist.
A money problem? Well, that's when you might
want to make the acquaintance of a good financial planner.
Maybe you've come into a large inheritance or
your own income popped suddenly. Maybe you gave birth to triplets
or recently divorced. Maybe you just bought or sold a business.
Or maybe you just feel uneasy about your money -- you're not sure
where it's going now or how far it will take you in the future.
Whatever your money problem -- too much or too
little -- a financial planner can probably help.
"Many people don't realize that hiring
a financial planner can be a good investment," says Gerri Detweiler,
radio host and author of "Slash
Your Debt."
"If you find yourself letting important financial decisions
go because you just don't seem to get around to them, you might
want to talk to a financial planner to get those jobs done."
Do you need help?
How to tell if you need one?
That's easy, according to Barry Katz, the president
and founder of Caratel Financial Services Inc. in Sunrise, Fla.
"If you ask yourself the question, then
you probably do. Everybody can benefit from using a financial planner
simply by getting all of your ducks in a row," he says.
You want to start your search by looking into
the alphabet soup after the name:
- CFP: Certified financial planners
have passed a national test covering insurance, investments, taxation,
employee benefits, retirement and estate planning administered
by the CFP Board of Standards. They must meet experience requirements
and abide by a code of ethics.
- ChFC: Chartered financial consultants
are the insurance industry's financial planning designates. They
pass exams in finance and investing.
- CLU: Chartered life underwriters
pass national exams in insurance and related subjects and have
business experience in the insurance industry.
- CFA: Chartered financial analysts
are experienced financial analysts who have passed exams in economics,
financial accounting, portfolio management, security analysis
and standards of conduct.
- AICPA PFP: Personal financial planning
specialists are certified public accountants who have earned the
financial planner designation from the American Institute of Certified
Public Accountants.
Confused?
Don't be. Unless your needs fall outside the
norm or you have a particular bond with an accountant or insurance
agent who also does financial planning, you'll probably be shopping
for a CFP.
Fee structures
Certified financial planners come in four flavors: Fee-only, fee-based
with commission, fee-offset and commission only.
Simply put, planners who make a commission do
so on the financial products they sell you -- insurance policies,
mutual funds, etc. Some charge a fee and collect commissions
on what you buy from them, others offset the commissions
they earn against their flat fee, and some work on commissions alone.
There is nothing underhanded about this form
of compensation; bankers and even accountants today receive commissions
in the same way and we barely blink an eye at it.
Fee-only planners, on the other hand, charge
a set amount, either an hourly fee, flat fee for a comprehensive
plan or annual retainer, and do not earn any commissions. Some fee-only
CFPs may not be registered to sell financial products; others, like
Katz, believe it presents a conflict of interest to do so.
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