There’s retirement to plan for and college tuition for the kids. Insurance. Estate planning. And, oh, don’t forget a wedding for your daughter. If all this sounds familiar, it may be time for you to start shopping around for a financial planner.
Certain experts, such as stock brokers or tax preparers, are there to help you deal with specific aspects of your financial life. But if you don’t have an overall plan, you may well be spinning your wheels trying to get ahead. That’s where financial planner Singapore come in. One who’s trained and astute will typically draw up a written plan that focuses on such things as your retirement and insurance needs, the investments you need to make to reach your goals, college-funding strategies, plans to tackle debt – and finally – ways to correct any mistakes you have made in haphazardly trying to plan on your own.
Before you begin shopping for a planner, one word of caution: Unlike brain surgeons, hairdressers, and plumbers, a financial planner doesn’t have to crack a book, take an exam or otherwise demonstrate competence before hanging out a shingle. In other words, anyone can claim the title – and thousands of poorly trained people do. That means finding the right planner for you and your family will take more work than researching the best new flat-screen TV. And so it should. After all, it’s your financial future that’s at stake.
Here’s how to get started:
The old-boy network
One easy way to begin looking for a financial planner is to ask for recommendations. If you have a lawyer or an accountant you trust, ask him for the names of planners whose work he’s seen and admired. Professionals like that are in the best position to judge a planner’s abilities.
But don’t stop with the referral. You should also look closely at credentials. A certified financial planner (CFP) or a Personal Financial Specialist (PFS) must pass a rigorous set of exams and have certain experience in the financial services field. This alphabet soup is no guarantee of excellence, but the initials do show that a planner is serious about his or her work.
You get what you pay for
Many financial planners make some or all of their money in commissions by selling investments and insurance, but this system sets up an immediate conflict between the planners’ interests and your own. Why? Because the products that pay the highest commissions, like whole life insurance and high-commission mutual funds, generally aren’t the ones that pay off best for the clients. In general, we think the best advice is to steer clear of commission-only planners. You also should be wary of fee-based planners, who earn commissions and who also receive fees for their advice.
That leaves fee-only financial planners. They don’t sell financial products, such as insurance or stocks, so their advice is not likely to be biased or influenced by their desire to earn a commission. They charge just for their advice. Fee-only planners may charge a flat fee, a percentage of your investments – usually 1 percent – under their management or hourly rates starting at about $120 an hour. Still, you can generally expect to pay $1,500 to $5,000 in the first year, when you will receive a written financial plan, plus $750 to $2,500 for ongoing advice in subsequent years.
Where to get help
If people you trust can’t recommend planners in your area, or if you want to broaden the field from which you choose, you can get lists of local planners from the following trade organizations. Check out each group’s website.
* National Association of Personal Financial Advisors
* Financial Planning Association
* American Institute of Certified Public Accountants
Trust but verify
After putting together a list of at least three candidates, arrange face-to-face interviews. These consultations are usually free. Among the questions you’ll want to ask are:
* Do you specialize? Many planners try to be jacks-of-all-trades and take any client who can pay. Some, however, work primarily with a certain type of client, such as small business owners or widows. Others tend to focus on one area of financial planning, such as retirement issues or college funding. You’ll want to make sure the planner has experience working with people whose financial lives are similar to yours.
* How are you compensated? Any reputable planner won’t flinch when you ask this question. It’s imperative to find out ahead of time both how you’ll be charged and how much.
* May I see your ADV form? This is a report the planner files with regulators. Part I of an ADV (the name stands for adviser) will tip you off to legal or regulatory problems in the planner’s past. Part II outlines his or her experience, investment strategies and potential conflicts of interest. Planners are legally required to show you Part II if you ask. They can refuse to show you Part I, but that’s a good reason for you to refuse to give them your business.
* May I have the names of three clients similar to me? You’ll want to talk to these clients about their experience with the planner. It’s also a good idea to ask to see at least one recent written plan; the planner can block out the name of the client to protect his or her privacy.