Obtaining The Services of a Professional Financial Advisor

As mentioned above, if you are a participant in a company-sponsored retirement plan of a larger employer, your company may have an Employee Benefits or Human Resources Department that will help you with many of your investment questions.  If you invest in your own IRA, the mutual fund company that you invest through will provide free investment counseling services to assist you with your questions.  Despite the information available through these sources, the information provided you in this book, and other information that you may acquire through the Web sites I have provided to you, you may desire additional and more sophisticated investment advice.  This more sophisticated investment advice is warranted during your working years if the dollar amount of your plan assets has become significant relative to your annual salary.  Another point in time when it may make sense to pay a financial planner for investment advisory services is when you are nearing retirement and you need help with the distribution options open to you under your retirement plan or IRA.

If you go this route, you will want to obtain the services of a financial planner who has obtained a certification of competency.  One respected certification for financial planners is the Certified Financial Planner (CFP) designation (granted by the Certified Financial Planners Board of Standards).  A second designation that assures that the financial planner possess a significant degree of competency is the Chartered Financial Consultant (ChFC) designation (granted by the American College in Bryn Mawr, Pa.).  As is the case with the CFP designation, the ChFC is granted only after the financial planner has passed a rigorous battery of course work and tests dealing with sophisticated financial planning issues.

How do you locate a competent CFP or ChFC?  If you look in your local Yellow Pages under financial planning, you will most probably see a number of potential candidates.  Determining the individual CFP's and ChFC's competency level and ethical standards might be more difficult.

I have already mentioned to you on page 47 how to locate a competent CPA through your state’s Society of CPAs.  The state Societies all have CPA referral services that provide some assurance that the recommended CPA is a competent one.  A significant trend in the professional business community is that a number of CPAs are additionally obtaining the CFP designation.  These CPAs might additionally or alternatively obtain the Personal Financial Specialist (PFS) designation from the American Institute of Certified Public Accountants. The CPA/CFP or CPA/PFS is a great choice for you in that your state Society of CPAs can help you with the referral and the individual who you retain can assist you with your taxes as well as educational savings and retirement planning.

Another approach would be to go with a CFP or ChFC who you heard through friends or family is an excellent financial planner.  Always check out a referred CFP or ChFC both with the Better Business Bureau and Attorney General’s Office in the state where you live.  Go to my Web site, click on Miscellaneous and then State Governments to find your state’s home page and information on your state’s Attorney General’s Office.  Lastly, check with the Certified Financial Planner Board of Standards (for CFPs) to determine if any complaints or disciplinary actions have been initiated against a CFP who you are considering retaining (go to my Web site, click on Retirement Planning, then Finding a Professional Financial Adviser and then CFP Board).  At the same location on my Web site you can also do a search for Certified Financial Planners and obtain a large amount of excellent consumer investment information from the Financial Planning Association of Los Angeles (click on FPALA).

Concluding Thoughts

In any case, don't jump to any conclusion with regard to your mutual fund purchases.  Obtain all information that is available to you, if you are married study it carefully with your spouse, and think about what you have learned for a few days before making your ultimate decision.  Try not to converse with friends and family about their investment strategy.  You will always get individualized, anecdotal stories that may or may not reflect reality.  Stick with the information the professional sources I have referenced are providing you.  Then structure your investment portfolio within the parameters of your risk tolerance analysis.  And remember, never invest in individual stocks and bonds, only in mutual funds.