Financial planners that work on a commission basis where you pay nothing for their services usually
require a starting investment nest-egg of $50,000. The planner is compensated by a sales commission
from the products that they sell, such as mutual funds, annuities, and life insurance. There can
obviously be a conflict of interest. Financial planners that work for banks are paid a salary and
you are not charged for their service.
Some financial planners who charge you a fee for their services also collect commissions from the
companies whose financial products they sell. This is okay, but it is up to you to ask about this
and get in writing how much the planner will receive for services, along with the money's source.
Fee-only planners charge between $75 and $300 per hour to advise you and steer you towards your
best investment solutions. Expect to spend $1,000 to $10,000 for their services, depending on how
much money you are investing.
Besides helping to identify your goals, the financial planner will consider your current and future
income, your future income needs, how many years you have to grow your investments, and your risk
tolerance. Preservation of your money is also high on the list of important considerations.
By learning about investing, you will know what questions to ask. Some people don’t ask many
questions because they're afraid this will make them appear stupid. But by not asking questions,
and keep asking until you finally get answers that you understand and feel comfortable with, you
can waste a lot of time and money.
In many states, financial planners are unregulated. Anyone can call themselves a financial planner.
If the planner is certified by the Certified Financial Planner Board of Standards, they have
received the CFP designation by passing a 10 hour examination covering 106 financial topics. About
half taking the exam fail. There are currently about 37,000 CFP’s.
Investment consultants are not regulated in any state, if they do not actually sell securities.
A good resource is Vanguard’s How to Select a Financial Advisor at 800-662-7447. You can
check out certified financial planners at 888-237-6275. Call there also for their Financial
Planning Resource Kit.
Other Financial Planners Topics:
-
Financial Planners
- Financial Proffesionals
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