Finding a Reliable Financial Planner Takes Some Homework and Inquisitiveness

Q. With so many stories in your business section recently mentioning the importance of having a financial planner, I finally realized that my lover and I should begin discussing our financial situation and future. But how do we go about finding a reliable planner? Any help you can offer would be greatly appreciated.



A. The beginning of the year often provides a convenient opportunity to review your finances to determine whether you’re pointed in the correct direction. But before you rush off to consult a financial planner, take some time to understand what you should be looking for. This can help ensure that your questions are on target and that you understand the answers.


The shelves of libraries and bookstores are jammed with books that describe how to build an investment portfolio. Many of these primers are worth reading before you embark on an investment strategy. Another initial step is to enroll in a course at a local junior college or university extension, both of which typically offer classes in personal finance and investing.

Once you are ready to consult a planner, you should realize that these advisors come with a variety of qualifications and methods of conducting business. Basically, anyone can claim to be a financial planner, so consumers must be careful. Finding a good planner who understands your goals and investing temperament can be difficult, but it is not impossible.

As with choosing any professional, the best recommendations often come from friends or relatives who can share their experiences and advice. The family lawyer and accountant are also important referral sources. Ask these professionals whom they use for their own financial planning and to whom they refer their clients.

Here are some questions to ask planners you are considering hiring:


* How long have you been in this business?

* How have you prepared for this job?

* What job did you have before becoming a financial planner?

You might also ask the planners to give you the names of some other clients. Of course, they are unlikely to pass on names of dissatisfied people, but you can learn a lot from clients who profess to be pleased with the services they receive.

Here are some sample questions:

* Would you select this planner again?

* What are his or her strengths and weaknesses?

* Are you faithfully following the advice given?


* What would you do differently if you had a chance to do it all over again?

* How has the planner’s advice made a difference in your financial affairs?

County courthouse records are another source you should check before hiring a planner. Search the criminal and civil filings for the names of people you are considering, to make sure they haven’t been sued by a disgruntled client or, worse, charged with a crime.

Also ask to see copies of the disclosure forms the planner files with the Securities and Exchange Commission. Anyone selling registered securities and giving or selling investment advice must file an ADV Part II with the SEC.

Obviously, a planner who advises you to buy investments that pay him or her a commission has a built-in bias toward such investments. Many so-called financial planners are little more than salespeople who steer you exclusively to products of their company. You are not told about the full range of choices available--only those that would get the representative a commission. Typically, you don’t pay for the services directly; rather, the planners are compensated by the commissions they receive on the products they sell.

Advisors who charge a flat fee generally do not stand to benefit from recommending one course of action over another; however, their advice doesn’t come cheap. According to one study three years ago, the median price nationwide of a short-term financial plan was $300 and the median price of a comprehensive long-term plan was $950.

In addition, a fee-only advisor may not be able to help a client carry out his or her recommendations. Clients may face additional fees for stockbrokers or insurance agents or others who must be consulted in order to execute the planner’s advice.

To determine that recommendations are not given merely to generate commissions, ask the planner to disclose how much money he or she would make if you followed the recommendations.


If you need help finding a fee-only financial planner, the National Assn. of Personal Financial Advisers in Buffalo Grove, Ill., can provide its members’ names and addresses. Call the group at (800) 366-2732 and leave your name and address on the automated response line.

You will be sent a list of NAPFA members working in your area. In addition, members near you will be notified of your interest and may contact you directly to follow up on your inquiry.

You can also find a fee-only financial advisor through the Licensed Independent Network of CPA Financial Planners. Call (800) 737-2727. Leave your name and address, and an association member in your area will contact you.

To qualify for NAPFA, members must be fee-only advisors with three years of financial planning experience. Also, they must be registered investment advisors who offer comprehensive financial planning services.


Carla Lazzareschi cannot answer mail individually but will respond in this column to financial questions of general interest. Write to Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053 Or send e-mail:

Choosing a financial planner is one of 30 panels to be offered at the Investment Strategies Conference Feb. 22-23. To register, call 888-TIMES97.