Selecting a financial planner helps for a richer retirement
Rob Hoxton
The Department of Labor reports that less than half of Americans have calculated how much they need to save for retirement. This is even more surprising when you consider that the average American spends 20 years in retirement. It is difficult to know where to start when dealing with these issues. Do you know if you’re on track to achieve a secure retirement, free from financial worry? If not, you may want to consult a financial planner for help.
A financial planner is an investment professional who helps clients meet their financial objectives, including retirement savings, home ownership, college expenses, etc. Planners begin by analyzing their clients’ current situation and goals. Next, they calculate specific methods to achieve those goals and help implement these strategies. Then financial planners monitor their clients’ progress and create new recommendations based on the results.
There are many things to consider when hiring an investment professional, but all attributes fall into three broad categories: integrity, competence and diligence.
Integrity: The Business Model
Financial planners have several business models: One business model is where financial planners are paid for products that they sell, which means that they could have a conflict of interest selling products on which they are paid commissions or incentives from brokerage firms, mutual funds or insurance companies, and providing financial advice.
Other planners deliver financial advice in an environment that minimizes the potential for conflicts of interest. These fee-only financial planning
firms help to minimize this risk, since their sole source of revenue is fees paid by clients. They are free to recommend products and strategies that best suit their clients’ needs.
Competence: Training and Experience
There are a variety of designations that financial professionals can have, but all financial planners must have the Certified Financial Planner® designation. The Certified Financial Planner Board of Standards awards this certification to individuals who meet education, examination, experience and ethics requirements. Holders of the CFP® must agree to uphold strict standards of conduct, including placing the interests of their clients above their own.
Other common designations include Accredited Investment Fiduciary (AIF®), Accredited Estate Planner (AEP), Accredited Asset Management Specialist (AAMS®) and Certified Public Accountant (CPA). Accredited Investment Fiduciaries® and Accredited Asset Management Specialists SM. Similar to Certified Financial Planners®, designees receive specialized training and adhere to codes of ethics.
Diligence: Financial Planning Process
The financial planning process is the foundation for all client recommendations. This begins with an in-depth evaluation of client finances, circumstances and goals. Each client’s situation is different, and this requires financial planners to create investment strategies with
specific objectives in mind. Many investment professionals cater to a specific clientele, and it is essential to research prospective planners to see if they are a good fit for you. It is also important to know the services they will provide.
A key aspect to consider in the financial planning selection process is client satisfaction: Does the planner come highly recommended? Did a knowledgeable friend refer you to his or her financial professional’s firm?
Knowing what to look for when hiring a financial professional is the first step in achieving a financially secure retirement. These individuals dedicate their lives to helping their clients reach their goals. They have the knowledge and training to understand the complexities of retirement, investing and saving. If you are struggling to plan for retirement, contact a financial planner for help.
— Rob Hoxton CFP®, AAMS, AIF® is the President and CEO of Hoxton Financial, Inc., a leading fee-only investment advisory firm. Hoxton is the developer of The Grow Greenr® Method and the author of Grow Greenr, 10 Steps to a Richer Life, available at Amazon.com and Investing in Uncertain Times, which can be downloaded as a PDF file from www.hoxtonfinancial.com.
