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Financial Planning
By Bruce Mushial
How can you benefit or be hurt
by a financial planner? First you have to qualify who the
financial planner is and what are their qualifications. Many
individuals calling themselves financial planners have self-serving
interests and are nothing more than glorified insurance agents,
mutual fund salesmen, or stockbrokers. These are not
financial planners. What should you look for in a true
financial planner? A financial planner should look at your
entire financial picture and make recommendations to help
get you to your goals. Financial planners using the CFP
(Certified Financial Planner) title have completed substantial
coursework and ongoing continuing education before they are
allowed to use the CFP designation and represent a group that
will generally give your finances a thorough review. Financial
planners are compensated by one of three methods. They can
charge a flat fee to review your finances and provide sources
for the solutions they recommend, but they don't offer (nor
earn a commission on) any products they recommend. The second
method is a financial planner who charges a nominal fee to
prepare a financial plan, but then earn most of their fees
from the products they sell. The third method is a hybrid
of the two. Many believe there is less conflict of interest
if the planner receives a flat fee rather than a commission.
The flat fee planner has the entire universe of products
to direct you toward, the commission-based planner only has
the products of the companies he is affiliated with, certainly
a smaller pool of offerings that someone who can recommend
any product from any company. You would expect a financial
planner to look at your tax situation, retirement planning,
and whether you have a current will, but there are many areas
a financial planner can delve into. A planner will probably
look at your life insurance coverage and can provide assistance
with family trusts and family limited partnerships. Other
topics a planner can address are disability insurance, funding
a child's education or caring for an aged parent. Your
financial goals should be the center of attention. Do
you want to retire early, start your own business, buy a vacation
home, or substantially support charities? All these are topics
that can be reviewed by a financial planner. A good way to
pick a financial planner is to check with business associates
or friends. They can probably point you in toward a planner
whom they felt gave them a good review of the financial situation
at a fair price.
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