The Money Doctors
By Russell Wild
"I'd like to live as a poor man with lots of money," the late Pablo
Picasso once quipped. Wouldn't we all? To have money and all the
wondrous things it can provide without the hassles and headaches
would seem almost surreal. Yet if anyone could make Picasso's dream
come true, it would be a capable financial planner.
But where would you find a good one? Here are some tips:
Ask yourself why you need one
Take a good look at your strengths and weaknesses when it comes
to money, then ask yourself where you most need a helping hand. Financial
planners-also called financial advisers, financial consultants, or
wealth managers-vary widely in their practices and expertise. Most
will manage or provide guidance on investments, others may offer counsel
on everything from how to balance a checkbook and reduce debt to how
to lower taxes or set up an estate plan. Some will work with you for
a day to help you get your fiscal affairs in order; others prefer longer
term arrangements.
| 'We’re talking about your life
savings here; you don’t want to entrust it to someone merely
because he or she speaks Spanish' |
Gather names and brochures
Start by drafting a list of potential planners near your home.
Ask family, friends, and colleagues for referrals. The
National Association of Personal Financial Advisors (800-366-2732)
or the Financial
Planning Association (800-647-6340) can provide referrals in your
area. Some people can work with a planner from afar, perhaps even in
another state. "But my sense is that most Hispanics, much more so than
Anglos, want to look in someone's eyes when they do business," says
Catherina Pareto, CFP®, a senior financial planner with Investor
Solutions Inc. in Miami. "Especially those not born here, like
my parents-Mom is from Cuba and Dad is from Chile-like to see bricks
and mortar. They would never feel comfortable working with a planner
strictly by telephone or e-mail." Ask yourself how you would feel working
with someone far away.
¿Se habla finanzas?
Both organizations listed above can direct you to a handful of
bilingual advisers, but unless you're in a major city with a large
Spanish-speaking population, finding a bilingual planner could be challenging.
Hispanics make up more than 13 percent of the population, yet only
about 1 percent of planners identify themselves as such, according
to a recent survey by Certified Financial Planner Board of Standards
Inc. What to do? You can always turn to the yellow pages or
newspaper and look for ads stating Se Habla Español. Be careful,
however! "We're talking about your life savings here; you don't want
to entrust it to someone merely because he or she speaks Spanish," says
fully bilingual Ricardo Ulivi, Ph.D., owner of Ulivi
Wealth Management in Orange, California, and a professor at California
State University, Dominguez Hills. "You need to find someone who is
truly competent in finances. If your English is limited, and if you
can't find someone who is both competent and speaks Spanish, then find
someone competent and bring along an interpreter," he urges.
Look for experience and credentials
Unlike those who are licensed as physicians or dentists, just about
anyone can call himself or herself a financial planner. That's why other, more standard credentials are important.
A business degree, such as an MBA, is a good thing. Some CPAs and attorneys
specialize in financial planning. Also, in the past several years,
the designation CFP®, which stands for certified financial planner,
has become widely recognized as a mark of competency. To attain the
CFP®, a planner must meet certain educational requirements, pass a
rigorous exam, and have a requisite amount of practical experience.
He or she also agrees to abide by the profession's code of ethics.
Toss the bad apples
Beyond having credentials, a financial planner (or his or her employer) should
also be registered with the Securities and Exchange Commission. Find out
by asking to see a candidate's ADV (adviser) form. Anyone who gives investment
advice professionally is required to provide such a form. It will provide
you with information about the planner and his practice, such as length of
time in the business, number of clients, and how much money he or she manages.
It will also tell you about any disciplinary history for unethical conduct.
Also check the Better
Business Bureau and the Certified
Financial Planner Board of Standards (303-830-7500) to make sure the
planner isn't prone to lapses of good judgment.
Stroll into the office
After you've gathered a list of planners who look clean on paper,
it's time to meet face-to-face. Schedule an initial appointment. There
should be no charge. Although most of us are not financial planning
experts, we can still get a pretty good sense of whether we have chosen
the right planner. "Ask what sets him apart from other planners. Ask
for his philosophy on money; does he have a clearly defined strategy
for financial success? As for investing, ask how he does it, and whether
his choices in investments are based on hunches or on academic research.
If a planner can't answer those questions quickly and confidently," Pareto
says, "think twice about hiring that planner."
Check out the bill
Be clear about how, and how much, a planner will charge. Some planners charge
by the hour, some charge a percentage of the money they are managing, and
others will make money from commissions on products they sell you. Many planners
who do not sell products or take commissions (fee-only planners) feel they
can be more objective in the advice they give and in the investments they
suggest. Commissioned planners argue that an honest planner would never be
swayed into making bad investment choices by the commissions. Like astronomers
and astrologers, the two groups sometimes seem to hate each other, but there's
no reason that you need to pick sides. "You want someone who is honest and
really knows what he or she is doing; that matters much more than how that
person is paid," says Helen Salazar-Realini, CFP® and chairwoman of the Financial
Planning Association of Miami-Dade in Florida.
Open Up
Financial planning is not like auto mechanics. It can get awfully
personal. A competent planner working on your long-term financial goals
should be asking you questions about your retirement dreams, your health,
and perhaps even the quality of your marriage and your relationship
with your children and grandchildren. (Well, do you want them in your
will or not?) "If you're going to be working with a planner for a long
time, the two of you should click. You should feel comfortable together," Ulivi
says. "Competence and honesty are all-important. But personality certainly
matters, too."
Check out our web-exclusive questionnaire that you can give to brokers,
advisers, or others in the investment business to help you evaluate whether
you can entrust your money to the person who fills it out.
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