CHOOSING A FINANCIAL PLANNER

People seek help from a financial planner for a number of reasons; planning for retirement, finding the best way to finance a new home, saving for children's education, or simply to get finances in order. Whatever your needs, working with a financial planner can be a helpful step in securing your financial future.

Finding the right planner is extremely important because your choice will almost certainly affect your financial future. In the next two columns, I will suggest some questions (compliments of the Financial Planners Standards Council) to help you interview and evaluate financial planners so you can find one who is right for you). Your goal is to find a competent, qualified professional with whom you feel comfortable and whose business style suits your financial planning needs.

Question 1: What are your qualifications?
Many people offering financial services call themselves financial planners, advisors or consultants. However, financial planning is a detailed, complicated process. It requires hands-on experience and a strong technical understanding of topics such as personal tax planning, insurance, investments, retirement planning and estate planning, and how a recommendation in one area can affect the others.

Ask the planner about her/his qualifications to offer financial advice and if, in fact, she/he is a qualified planner. Ask what training she/he has successfully completed. Ask what steps she/he is taking to stay current with changes and developments in the financial field. Ask whether she/he holds any professional designations including the Certified Financial Planner designation, which is recognized internationally as the hallmark of the competent, ethical financial planner.

Question 2: What experience do you have?
Experience is an important consideration in choosing any professional. Ask how long the planner has been in practice, the number and types of firms she/he has been associated with, and how this work experience relates to the current practice.

Inquire about what experience the planner has in dealing with people in similar situations to your situation and whether she/he has any specialized training. Choose a financial planner who has a minimum of two years of experience advising individuals on their financial needs.

Question 3: What services do you offer?
The services a financial planner offers will vary and depend on her/his credentials, registration, areas of expertise and the organization for which she/he works. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or taxation. Planners who sell financial products such as insurance, stocks and bonds, and mutual funds, or who give investment advice, must be registered with provincial regulatory authorities and may have specialized designations in those areas of expertise.

Question 4: What is your approach to financial planning?
The types of services a financial planner will provide vary from organization to organization. Some planners prefer to develop detailed financial plans encompassing all of a client's financial goals. Others choose to work in specific areas such as taxation, estate planning, insurance and investments. Ask whether the individual deals only with clients with specific net worth and income levels and whether the planner will help you implement the plan she/he develops, or refer you to others who do so.

Question 5 : Will you be the only person working with me?
It is quite common for a financial planner to work with others in her/his organization to develop and implement financial planning recommendations. You may want to meet everyone who will be working with you. Financial planners often work with other professionals including ones you already use such as your lawyer and accountant. If the planner works with professionals outside her/his own practice get a list of their names and qualifications

Question 6: How are you compensated?
Your planner should disclose in writing how she/he will be compensated for the services she/he provides to you. Planners can be paid in several ways

. Commissions: The advisor is compensated if you purchase financial products to implement a financial planning recommendation. In some cases, the commission is paid by the financial product supplier, such as an insurance company. In other cases, you pay the commission; for example, if you buy shares of a publicly traded company. Commissions are usually a percentage of the amount you invest in a product.
. Salary: The company for which the planner works pays the planner a salary. The planner's employer may get its revenues from fees paid by clients such as yourself or in commissions paid by clients making a purchase or by the financial product suppliers.
. Fee-for-service: Advisors paid on a fee-for-service basis may charge on an hourly rate, set a flat rate for a specific service, or be paid a fee based on a percentage of assets or income.

In some cases compensation might be a mix of fee and commission. You should also ask if the planner or organization receives any benefit other than commission, such as advertising and promotion subsidies, from suppliers of financial products.

Question 7: How much do you typically charge?
While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs would include the planner's hourly rates or flat fees or the percentage she/he would receive as commission on products you may purchase as part of the implementation of the financial planning recommendations.

Question 8: Could anyone besides me benefit from your recommendations?
Ask the planner to provide you with a description of any business interests and potential conflicts of interest in writing; for example, any business relationship or ownership interest in any company supplying financial products sold by the planner and the planner's employer.

Question 9: Are you regulated by any organization?
Financial planners who sell financial products such as securities and insurance or who provide investment advice are regulated by provincial regulatory authorities and may also subscribe to a code of ethics through a professional association. Others who are members of the accounting and legal professions are usually members of professional bodies which govern their fields. Planners who hold the CFP designation are subject to disciplinary proceedings of the Financial Planners Standards Council. It is a fair question to ask a planner whether she/he has ever been the subject of disciplinary action by any regulatory body or industry association. You can verify the answer by contacting the relevant organization. Ask the financial planner whether she/he subscribes to a professional code of ethics such as the Certified Financial Planner code of Ethics.

Question 10: Can I have it in writing?
Ask the planner to provide you with a written agreement detailing the services that will be provided. Keep this document in your files for future reference.

In summary, be careful in your choice of financial planner. After all, it is your money, your savings and your future that are at stake.

This information is general in nature, and is intended for educational purposes only. For specific situations you should consult the appropriate legal, accounting or tax expert.