Looking for Professional Help with Your Investments
by Donna V.S. Ortega
Getting started with investing can be a daunting process. There’s a lot to learn and, at the end of the day, your money is on the line. Some people are happy to take a more “do it yourself” approach to investigate their options and invest on their own, and there are many resources, on-line and off-line, that can provide information and help. But there are also licensed professionals who can help you with your investing decisions. And while these professionals can be a good resource, you’ll still need to do some prep work to make sure that you find a competent professional who is a good fit with your investment goals and planning needs. Here is a list of questions to ask before hiring a financial professional.
What are his or her credentials? There is a veritable alphabet soup of certifications and standards for financial professionals. Two of the more common are CFP (Certified Financial Planner) and CFA (Chartered Financial Analyst). Each designation is certified by an organization and requires specific training, tests, and adherence to ethical standards. You can learn more about some of the different designations and what they mean by visiting the Certified Financial Planner Board of Standards website.
How does s/he get paid and how much does s/he typically charge? Some professionals charge fees-only (an hourly rate or a flat fee for the service provided), others charge a commission based on the types of products they sell to you, and still others charge a combination of fees and commissions. Many personal finance experts recommend that you try to work with a fee-only professional in order to ensure that the professional does not have something to gain by getting you to invest in a specific product. All professionals should be able to tell you what a typical engagement for their services will cost based on the type of service(s) you want and your goal.
What experience does s/he have? Don’t just ask about the professional’s years of experience, but also about what type of work experience s/he has had. Check to make sure that s/he has worked with people in situations similar to yours with regards to goal, amount of assets to invest, and services requested. Once you determine that s/he has experience with clients that are like you, request a list of those references for you to follow up with, and then check them out.
What can s/he do for you? A professional’s services are limited by several factors, including their credentials and licenses, the company they work for, or their expertise. Think about the services you want to receive. Do you want someone only to help you map out a plan to achieve your financial goals but keep the freedom to choose your own specific investments? Or do you want someone who will not only help you plan, but also help you put your money into a specific vehicle? Think about whether you need someone with a specific area of expertise such as taxes or estate planning. Also, find out how the professional will work with you. For example, ask if you will be meeting face-to-face on a regular basis to formulate your plan and monitor activity, or if you will respond to a questionnaire and then have regular check-in calls. There is no right or wrong process, but it is important to find someone whose services and style fit with what you are looking for.
Lastly, do your own research to check on a professional’s disciplinary record and credentials. You can contact the Certified Financial Planner Board of Standards (phone: 1-800-487-1497) to confirm whether a professional holds the CFP credential and to check the CFP’s disciplinary record. Investment advisors must register with the Securities and Exchange Commission (SEC), or the state securities regulator in order to do business. You can contact the SEC at 800-732-0330 to verify their registration, or contact the North American Securities Administrators Association (phone: 202-737-0900) to find the appropriate state regulator, who can verify educational background and licensing
This is a basic list of things to look for when considering professional financial help. For more information, you can find a longer checklist here. The Investor Protection Trust also provides a free publication called “Getting Help With Your Investments” that you can download for free (PDF format, 164 KB).
This regular financial column is presented by Capital Area Asset Builders, www.caab.org, a nonprofit organization that helps people of all incomes to improve their financial management skills, increase their savings, and build wealth. Send your questions or ideas for future topics to saving@caab.org.
