Evaluating the Experts: Choosing a Professional Planner/ September 8th, 2003
A professional planner might be helpful if you've experienced difficulty staying the course with personal finance goals and objectives, or find it impossible to keep informed. There are plenty of people who make a go of it alone--and are successful. The focus is on planning, saving, and budgeting, three activities that take time to accomplish successfully. If you do your homework, a worthy planner will help you focus.
Types of plannersSeveral types of planners specialize in a variety of areas:
- Financial planners: Money magazine Senior Editor Joseph S. Coyle calls these individuals the "generalists of the group." Their training covers a broad spectrum of specialties that includes budgeting, investing, insurance, and retirement planning.
- Fee-only planners: Fee-only planners develop financial plans to fit your needs. They receive no commission for recommending products or services, but will charge an hourly fee for their efforts.
- Fee and commission planners: These planners charge a flat fee in addition to collecting commissions on investments sold to you. Once commission rates are tallied, you may end up paying more for their services.
- Commission-only planners: Commission-only planners receive all of their income from commissions garnered from your investment purchases. Keep in mind, commissions are their livelihood--investment vehicles they pitch may not be the best for you.
- Money managers: Money managers put together a portfolio of stocks and bonds designed to meet your needs. Transaction fees tend to be higher, but their success is based upon how well they perform with your money.
- Salespersons: Salespeople are the ones who call on the telephone wanting to sell their organization's investment product. While not necessarily bad, keep in mind you know nothing of them or their business, and they don't know you or your goals.
Don't be afraid to ask tough questions and demand specifics.
- Planners at credit unions and banks: Most credit unions and banks offer member-focused financial planning and money management help, via face-to-face meetings, and also through their
Internet sites. Many credit unions offer in-office financial planning through a program called MEMBERS Financial Services, offered by CUNA Mutual Group. Registered representatives provide an array of investment and insurance products. These representatives offer financial planning strategies along with investment options such as mutual funds, annuities, individual stocks, and life, accident, disability, and long-term care insurance.
- National Foundation for Credit Counseling™ Inc. (NFCC): Founded in 1951, the NFCC, Silver Spring, Md., through its member agencies, sets a national standard for quality credit counseling, debt reduction services, and education for financial wellness. NFCC members, often known as Consumer Credit Counseling Service (CCCS) or other names, can be identified by the NFCC member seal. This seal signifies high standards for agency accreditation, counselor certification, and policies that ensure free or low-cost confidential services. NFCC member offices can be reached in communities nationwide, toll-free at 800-388-2227, or online. Note that credit counselors focus on helping people overcome credit management problems; they do not provide investment and financial planning services.
A professional planner might be helpful if you've experienced difficulty with personal finance goals.