NEW YORK (AP) — Money management can be overwhelming.
Hiring a financial adviser to help sort it all out often seems like a good idea, but finding the right person can be an equally daunting task. It’s a challenge that can prevent many from fulfilling their New Year’s resolution to get the help they need.
“Sometimes we spend more time planning our vacations than choosing an adviser,” said Eleanor Blayney, the consumer advocate for the CFP Board, an industry group.
Blayney suggested viewing the search as an investment itself. “You’re going to be hopefully working with this person for some time to guide your financial affairs,” she said.
Planning needs are as unique as the individuals seeking help — and vary at different stages of life and career.
That means that finding an adviser is not an easy process, said Wayne Copelin, president of Copelin Financial Advisors in Sugarland, Texas.
One step that might help is to start by taking a financial planning course through a community education program, Copelin suggested. A few weeks discussing the various topics can give you a clear picture of what sort of help you need and what an adviser can offer.
Be wary of seminars sponsored by brokers, insurance companies and mutual fund companies. These events often involve pitches for specific products that may not suit your needs. Instead, check with your local library, public school district or community college for low-cost programs.
Once you know what you’re looking for, finding the right person to help will be easier.
Here are three steps to get you started:
1. Ask for recommendations
Check with friends, family and co-workers to find out who they rely on. Ask questions about why they recommend their adviser to determine if that person might be a good fit. Then contact the ones that sound appropriate to schedule initial appointments.
2. Interview several candidates
Even if you love the first person you speak with, it’s important to talk with more than one adviser. “That second conversation will help you understand that first conversation,” Blayney said. The CFP Board has a list of questions to ask on its consumer site, www.letsmakeaplan.org . The site also offers a detailed explanation of the planning process and the different types of advisers to choose from.
Prospective clients should ask advisers about their experience, their approach to financial planning and their fee structure, Copelin said. Make sure you understand whether the person is independent or works for a brokerage house or insurance company. Also take note of the questions the adviser asks you, and try to get a feel for how good he or she is at listening. You want an adviser who inspires trust and has some chemistry with you.
3. Do your homework
Learn about the credentials that financial planners advertise. This will take the mystery out of the alphabet soup used by various players in the industry. The Financial Industry Regulatory Authority, or FINRA, lists over 120 different designations, explains who issues them and details what sort of education is required to achieve each designation on its website http://bit.ly/zecxe6 .
Also to be sure to review their professional history. Check the disciplinary records of any professional you’re considering hiring. Start with a simple Internet search of the individual’s name to see if former clients are complaining.
Then move to official databases. FINRA has a tool called BrokerCheck that contains information on actions taken on brokers and firms. Find it at www.finra.org .
Each state also maintains records of any disciplinary procedures. Find links to the regulators in your state on the North American Securities Administrators Association website: http://www.nasaa.org/about-us/contact-us/contact-your-regulator/ .
Further guidance on researching individual brokers may be found on the Securities and Exchange Commission website at http://sec.gov/answers/crd.htm .
Check out the free lectures on “iTunes U” that focus on financial planning. Try Southwestern University professor Frank Paiano’s series, “Financial Planning and Money Management.”
There’s also a host of free advice on money matters at www.publications.usa.gov .