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Tuesday, May 30, 2023

Shopping Selectively for Financial Services Is Time Well Spent

When selecting a financial planner, it’s wise to shop around and ask questions upfront, say advisers.

Tom Warschauer, director of San Diego State University’s financial planning programs, says a key factor in choosing a planner is making sure they are who they say they are.

Because the field is wide open, anyone can call themselves a financial planner or adviser, he said.

Many planners are also registered brokers who may be paid by commissions based on the types and frequency of the products they sell, Warschauer said.

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There’s nothing illegal about this; it’s just wise to understand exactly who is being hired, and how they are compensated, he said.

In addition to checking that the planner has been certified by the Financial Planning Association, ask if the planner has other training and licenses. Many accountants and some attorneys also themselves financial planners, but it’s important to determine how long they have been working in the field, Warschauer said.

Also, don’t simply rely on someone stating that they are an investment adviser. Ask them to put it in writing that they are a fiduciary, meaning they are legally bound to put the client’s interests above their own, Warschauer said.

“If they put it in writing, they probably are a fiduciary,” he said.

Consider Clientele

Consider the type of clients the planner currently has, and what their investment strategy is, said Burt Williamson, who launched his own firm, PlanPrep, in 2006 in San Diego.

Williamson said he generally works with clients who have a minimum of $250,000 in assets, usually closely held business owners, senior executives and retirees.

Rather than focusing on maximizing returns and beating the market, Williamson said his approach is asset preservation and attaining market results within a carefully prescribed time frame that depends on when a client needs the money.

The goal is to keep changes to a minimum so that a client avoids getting dinged for transaction fees that increase costs and taxes, Williamson said.

Another major part of the research is asking how the planner is paid, and whether they earn fees on investments through commissions or through a percentage of the assets that are managed.

Try to figure out just how comprehensive a financial plan will be delivered, and whether it will be regularly reviewed for possible adjustments, Warschauer says.

Among some of the areas the planners should be evaluating are a client’s debt level, whether they could benefit from a will or trust, and their tax and insurance needs, he said.

Research Industry Web Sites

To ensure the planner is giving the straight scoop, would-be clients can check to see if there are any past or current legal issues associated with the business.

Two key Web sites are the Securities and Exchange Commission at sec.gov, and the Financial Industry Regulatory Authority, the self-governing oversight organization to the securities brokerage industry, at finra.org.

Finally, selecting a financial planner often comes down to a simple matter of feeling at ease with a particular person, say most planners.

“Even if a person wants to be my client, I ask them if they’ve talked with anyone else,” says Chris Rand, senior financial planner with Metropolitan Life Insurance’s Financial Planning division. “I tell them they should maybe talk to two or three others so that they feel they are making the right choice.”


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