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Choosing a Financial Planner

Financial planning is a vague term and is susceptible of many possible constructions. Almost anyone can call themselves a financial planner and many do. Some are very well credentialed while others are not so much. If you are considering working with a financial planner, you may want to learn exactly what they are offering and what experience they have as well as what fees and what benefits you can expect in a relationship.
If a financial planner is going to provide recommendations about specific investments, it is necessary for that planner to be registered with the SEC or an appropriate state regulator. A good starting point then in choosing a financial planner will be to ask about any registrations the planner holds as well as inquiry into other designations (such as CFP, CPA, CFA and the like). The planner should be more than happy to share such information with you.
The next step is to ask for a copy of the planner’s client agreement. This document should lay out in some detail what the rights and obligations of the planner and client will be during the relationship. It should clearly state the nature of any fees and costs to be borne by the client, when and how they are to be paid and what exactly the client can expect to receive in return. Separately, the planner may have a disclosure document such as the Form ADV Part 2 which registered investment advisers are required to provide their clients. Any such disclosure document should also be examined to learn about how the planner does business.
If a planner does not provide you with a client agreement to review or won’t provide any detail about the planner’s qualifications, customer referrals, or other documentary information such as registrations, then it would be wise to look for a different planner. It does not seem worthwhile to enter a business relationship with someone who is not open about their business or is prepared to do business without a formal agreement.


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