"Do I need a financial planner and if so, how do I find a good one?" is one of the most frequently asked questions we receive here at Sound Money. While many folks enjoy the challenge of hands-on financial management, some would prefer to have a trusted professional available for advice or to directly handle their finances and investments. Should you decide that you need these services, the next step is finding a competent and helpful advisor. Sound Money looks at what two financial services experts have to say on this topic.
In her book Making the Most of Your Money (Simon and Schuster 1997), Jane Bryant Quinn starts out by telling us that, in the long run, most people don't need financial planners. What everyone does need, she says, is some basic investing knowledge and experience. Begin by reading a number of books on the subject. Join a local investment club or pick a couple of mutual funds to start. Invest small amounts and observe how the market performs, how mutual fund companies work, and your reactions to it. Quinn emphasizes that there's no need to rush into or out of anything - this is a learning experience that is necessary to acquaint you with the language and ways of investing. Once you're comfortable with the basics, you are then ready to begin the process of locating and choosing a planner, if you decide you need one.
Quinn goes on to describe the different types of financial professionals and which one might best serve your individual circumstances. Understanding how professionals are paid is a vital part of the search, because it can affect the advice given. Quinn also includes a list of ways to locate and interview potential planners.
Ted Miller, in Kiplinger's Practical Guide to Investing, (Kiplinger Books 1999), discusses financial planners along with the many other types of financial advisors. Miller lists the various credentials that financial planners can earn from the International Board of Standards and Practices for Certified Financial Planners and what the credentials mean. All levels require course work and exams in various levels of financial management. Miller suggests looking for planners who have earned at least one of the five professional designations, those being: Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), and Personal Financial Specialist (PFS), along with Certified Public Accountant (CPA).
The best way to begin your search for a good financial planner is to talk to your friends and colleagues. If someone you know and trust can give a solid recommendation for a financial planner, check it out. Call the planner for an interview, but don't skip the tough questions. It's your call, but it's also your money.