INVESTMENT OUTLOOK : MANAGING THE NEW CHOICES : Financial Planner, Broker Offer Different Services

A stockbroker can help you put together an investment portfolio and even advise you on the range of securities and other opportunities available to you. But a broker is not necessarily a financial planner, who can evaluate your personal circumstances and objectives and draft a detailed investment strategy.

Choosing a good financial planner who understands your goals and investing temperment can be difficult, but not impossible. The best recommendations come from friends or relatives who can share their personal experiences and advice.

Obviously, a planner who advises you to buy investments that pay him a commission has a built-in bias toward those investments, and you should be aware of that situation. Advisers who charge a flat fee, whether an hourly charge or a prearranged amount, generally do not stand to benefit from recommending one course of action over another. However, fee-only advisers generally cannot execute trades for their clients. So, you will be forced to pay the commissions charged by stockbrokers, insurance agents or other salesmen needed to carry out your planner’s advice.

Be careful if a planner refers you to a particular salesmen to execute the plan. Ask if there is any professional connection between their businesses, to be certain that the advice you were given is solely for your benefit. If questions persist, ask the planner to disclose how much money he or she will make if you follow the recommendations.