10 Questions to Ask Your Planner
You may be seeking help from a financial planner for a number of reasons:
planning for retirement, finding the best way to finance a new home, saving
for children's education or simply to get help putting finances in order.
Whatever your needs, working with a financial planner can be a helpful step
in securing your financial future.
Finding the right planner is extremely important because your choice will
almost certainly affect your financial future. The questions in this checksheet
will help you interview and evaluate several financial planners to find a
competent, qualified professional with whom you feel comfortable and whose
business style suits your financial needs.
Don't be afraid to ask these and any other questions you feel need a full
and open answer. Any professional will welcome them.
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1. What are your qualifications?
2. What experience do you have?
3. What services do you offer?
4. What is your approach to financial planning?
5. Will you be the only person working with me?
6. How will I pay for your services?
7. How much do you typically charge?
8. Could anyone besides me benefit from your recommendations?
9. Are you regulated by any organization?
10. Can I have it in writing?
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1. What are your qualifications?
Many people offering financial services call themselves financial planners.
However, financial planning is a detailed, comprehensive process. It requires
hands-on experience and a strong technical understanding of topics such as
personal tax planning, insurance, investments, retirement planning and estate
planning - and how a recommendation in one area can affect the others.
Ask the planner what her qualifications are to offer financial advice and
if, in fact, she is a qualified planner. Ask what training she has successfully
completed. Ask what steps she takes to keep up with changes and developments
in the financial planning field.
Ask whether she holds any professional credentials including the Certified
Financial Planner designation, which is recognized internationally as the
mark of the competent, ethical, professional financial planner.
2. What experience do you have?
Experience is an important consideration in choosing any professional. Ask
how long the planner has been in practice, the number and types of firms
with which he has been associated, and how his work experience relates to
his current practice. Inquire about what experience the planner has in dealing
with people in similar situations to yours and whether he has any specialized
training. Choose a financial planner who has at least two years experience
counselling individuals on their financial needs.
3. What services do you offer?
The services a financial planner offers will vary and depend on her credentials,
registration, areas of expertise and the organization for which she works.
Some planners offer financial planning advice on a range of topics but do
not sell financial products. Others may provide advice only in specific areas
such as estate planning or taxation. Those who sell financial products such
as insurance, stocks, bonds and mutual funds, or who give investment advice,
must be registered with provincial regulatory authorities and may have specialized
designations in these areas of expertise.
4. What is your approach to financial planning?
The types of services a financial planner will provide vary from organization
to organization. Some planners prefer to develop detailed financial plans
encompassing all of a client's financial goals. Others choose to work in
specific areas such as taxation, estate planning, insurance and investments.
Ask whether the individual deals only with clients with specific net worth
and income levels, and whether the planner will help you implement the plan
she develops or refer you to others who will do so.
5. Will you be the only person working with me?
It is quite common for a financial planner to work with others in his organization
to develop and implement financial planning recommendations. You may want
to meet everyone who will be working with you. Financial planners often work
with other professionals, including ones you already use such as your lawyer
and accountant.
6. How will I pay for your services?
Your planner should disclose in writing how she will be paid for the services
she will provide. Planners can be paid in several ways:
Commissions: The planner is compensated if you purchase financial products
to implement a financial planning recommendation. In some cases, the commission
is paid by the suppliers of financial products such as an insurance company.
In other cases, you pay the commission, for example, if you buy shares of
a publicly traded company. Commissions are usually a percentage of the amount
you invest in a product.
Salary: The company for which the planner works pays the planner a salary.
The planner's employer may get its revenues from fees paid by clients such
as yourself or in commissions paid by clients making a purchase or by the
suppliers of financial products.
Fee-for-service: Planners paid on a fee-for-service basis may charge an hourly
rate, set a flat rate for a specific service or be paid a fee based on a
percentage of assets or income. In some cases, compensation would be a mix
of fee and commission. You should also ask if the planner or organization
receives any benefit other than commission, such as advertising and promotion
subsidies, from suppliers of financial products.
7. How much do you typically charge?
While the amount you pay the planner will depend on your particular needs,
the financial planner should be able to provide you with an estimate of possible
costs based on the work to be performed. Such costs would include the planner's
hourly rates or flat fees or the percentage he would receive as commission
on products you may purchase as part of the financial planning recommendations.
8. Could anyone besides me benefit from your recommendations?
Ask the planner to provide you with a description of her conflicts of interest
in writing, for instance, any business relationship with the companies or
ownership interest in any company that supplies financial products sold by
the planner and the planner's employer.
9. Are you regulated by any organization?
Financial planners who sell financial products such as securities and insurance
or who provide investment advice are regulated by provincial regulatory authorities
and may also subscribe to a code of ethics through a professional association.
Others who are members of the accounting and legal professions are usually
members of professional bodies that govern their fields. Planners who hold
the CFP designation are subject to disciplinary proceedings of Financial
Planners Standards Council.
It is a fair question to ask if he has ever been the subject of disciplinary
action by any regulatory body or industry association. You can verify the
answer by contacting the relevant organization. Ask the financial planner
whether he subscribes to a professional code of ethics such as the Certified
Financial Planner Code of Ethics.
10. Can I have it in writing?
Ask the planner to provide you with a written agreement that details the
services that will be provided. Keep this document in your files for future
reference.