In the age of “Do It Yourself,” some things are too important not to be supported by a professional. This is so true for the decisions, direction and discipline you need to reach your financial goals.
For example, can you tell if a traditional IRA is right for you, or would a Roth IRA be more suitable? Should you wait until you’re 67 to start collecting Social Security, or would age 62 be a better choice in the long run?
These are just two of so many questions anyone should ask an expert, yet frequently don’t. That’s probably why one in three Americans are not confident about their retirement savings, while less than 50% have any type of savings plan associated with specific goals, according to the National Association of Personal Financial Advisors.
It takes a professional to set you on the right financial path, whatever it is. But with so many types of experts to choose from, it’s hard to know where to turn. With a little more insight into who does what, however, you can at least start to narrow your options.
Know Your Pro
Financial professionals range from agents to investment advisors. Which one is right for you depends on what you want to achieve. Here are some of the more mainstream financial services providers and what they generally offer:
- Insurance Agents—insurance products can go well beyond simply protecting from loss, and insurance agents can offer access to many financial vehicles that meet different current and future needs, such as retirement income, college funding or business needs.
- Registered Representatives—these individuals help you buy and sell investment products, such as stocks, bonds, variable annuities, IRAs and mutual funds, etc.
- Investment Advisor Representatives—these are representatives of a firm that is a registered investment advisor. They can offer portfolio management and financial planning for a fee.
- Certified Financial Planners® (CFPs)—rather than a license to sell certain types of products, CFP® practitioners complete a body of training and testing to give them a more thorough understanding of financial planning, tax and estate planning, risk management and other investment concepts.
- Certified Public Accountants (CPAs)—such professionals are certified by the state to offer corporate tax planning, auditing, controller services and other tax-related advice.
Which Pro When
Knowing a little more about what they can do, choosing a financial professional simply comes down to what you actually need. Your search needn’t be a major chore. One of the best ways to find someone is simply to ask for referrals from people you trust and with whom you may share goals and values.
With a few names in hand, you want to talk to all of them, just like you would with multiple contractors for a home improvement project or the like. Oftentimes, when they can all seem very similar, it could just come down to good chemistry. You have to feel good about your choice, or it just won’t work.
What To Ask
Interviewing a potential financial professional should typically cover three important areas, which begin with a few key questions.
- Q: How are you paid for your services?
- Financial professionals make money in different ways, such as commissions, flat fees, per-transaction or based on a percentage of the assets they manage for you. Asking this question will help you both set expectations.
- Q: What can you offer me and what do you consider your strong suit?
- Financial professionals may have a wide range of training and licensure, but often will specialize in one or two areas as they gain career traction. You need to discover what they are equipped to provide, and what they believe they’re good at to know if they can really help you.
- Q: What are your credentials and how do you work with your clients over the long-term?
- Financial professionals often display certifications on their business cards. Don’t be shy to ask what each stands for, how they earned it, and whether it applies to your situation. As for working through performance or other speed bumps down the road, a financial professional should meet with you regularly to account for changes in your life, in your goals and in the economy.
Where To Now?
After you speak with a few pros, you may still want more background on them or just some tips on where you can keep looking. There are many objective resources to help you out. Among the better ones include:
- www.AARP.org–not just for retirees or even group members, this website is full of tools and ideas to help you identify who or what you may need and where to find them.
- www.Adviserinfo.sec.gov–sponsored by the SEC, you can check the backgrounds of specific individual investment adviser representatives or investment advisor firms right here.
- www.nasaa.org–a nearly 100-year old watch dog organization to help advocate and protect investment consumers.
- https://brokercheck.finra.org/–FINRA’s own source of background checks and work histories on their thousands of individual registered representatives.
With these resources in hand, take the next step toward your financial goals. Because no matter how skilled a DIY-er you may be, some things are too valuable to go it alone.
Securities and advice regarding securities can be offered solely by representatives registered to offer such products or services through a broker/dealer or registered investment adviser.
Mutual Funds and variable products are sold by prospectus. For more complete information, please request a prospectus from your registered representative. Please read it and consider carefully a product’s objectives, risks, charges and expenses before you invest or send money. The prospectus contains this and other information about the investment company.
CFP® and Certified Financial PlannerTM are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.
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