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Financial Education for Everyone

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June 22, 2007

It used to be that only the wealthy consulted financial planners for advice on estate planning, investments and tax shelters. But with tax laws becoming increasingly complex, more people investing in the stock market through 401(k) plans and millions of baby boomers approaching retirement, people at all income levels now seek professional help to plan their financial future.

Choosing the right financial planner may seem overwhelming and you may ultimately decide your situation doesn't warrant one, but if you think you might, here are a few tips to help navigate those murky waters:

What are your needs? Some people simply want a one-time, objective opinion about whether their current financial plan will meet their future needs, such as at retirement or in an emergency. Others haven't got a plan yet and don't know where to begin.

Ask yourself these questions:

  • Are you expecting a large inheritance, or at the other extreme, having trouble saving or overcoming debt?
  • Do you wonder how marriage, divorce, a new child or caring for aging parents might impact your financial situation?
  • Do you need a savings strategy for college tuition?

Do your homework. Ask trusted friends, relatives, coworkers, your accountant or lawyer for referrals. Find out what factors they used to choose their financial planner and whether they're satisfied with his or her performance.

Interview at least three candidates. Often, they'll provide a free consultation and ask you to fill out a questionnaire beforehand. The goal is to find someone you trust – an advisor who will listen to your needs, look out for your best interests and not try to sell you unneeded products or services. And don't be afraid to ask for references.

Research their qualifications. Many different types of professionals call themselves financial planners but not all have the same training or specialties. Most groups that certify planners have their own credentialing requirements, regulators and ethical guidelines, but education and experience requirements vary.

The Financial Planning Association (www.fpanet.org), the National Association of Personal Financial Advisors (www.napfa.org), and the Certified Financial Planner Board of Standards (www.cfp.net) are good resources to learn more about the different kinds of financial planners.

Fees: Financial planners can get paid by the hour, by flat rate, by commission or some combination of these. Some people think there's a potential conflict of interest if advisors earn commissions for products they recommend, so ask for full disclosure – they're working for you, not the other way around. Many will deduct other fees from any such commissions.

Get involved. People often hire financial planners so they won't have to think about their own finances, but that's pretty shortsighted. You should understand everything you're being advised to do and be able to express your financial goals.

Everyone, whether they hire a financial planner or do everything themselves, should have a workable budget. Practical Money Skills for Life, a free personal financial management site sponsored by Visa Inc., features a guide to creating a budget you can live with, along with interactive budgeting tools (www.practicalmoneyskills.com/budgeting).

There's a lot to consider when hiring a financial planner, but it's worth the effort. You wouldn't see a doctor you don't trust and respect, and you should hold the expert giving advice on your hard-earned money to the same standard.


This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.