2008-12-26 / Columnists

Notes On Consumer Affairs

By Assemblywoman Audrey Pheffer

AUDREY PHEFFER AUDREY PHEFFER The recent uncertainty in the economy has had a disastrous effect on consumer confidence. Consumers are more worried than ever about their ability to buy a house, pay for college, go on vacation, or retire. The good news is that there are professionals who can help. A financial planner can help you organize your finances and create a workable plan to reach your financial goals. Choosing a financial planner is like selecting any other service professional. There are certain questions you should ask a planner before you hire one to make sure you will be working with someone who can best help you reach your goals.

The first thing to look for is experience. How long has the planner or firm been in business? Which financial firms, if any, has the planner worked for, or with, in the past? What sort of experience does the planner possess? It is preferable to have someone with experience helping individuals; as opposed to a planner who has worked exclusively with companies.

Next, consider a planner's qualifications. Some planners are required to register with the Attorney General, though not all. You can contact the Attorney General's office at 1-800-771-7755 for more information. There are things you can look for to better your chances of finding a qualified individual. Ask if the planner is recognized as a CERTIFIED FINANCIAL PLANNER professional or CFP practitioner, a Certified Public Accountant - Personal Financial Specialist (CPAPFS), or a Chartered Financial Consultant (ChFC). If the planner holds a designation or certification, check on his or her background with the relevant designator or professional organization.

Find out what services are offered. Financial planners can offer a variety of services depending on their credentials, licenses, and areas of expertise. Financial planners are prohibited from selling insurance or securities without the proper licenses, nor can they offer investment advice without registering, if required, with the state or federal government. If these services are offered, be sure to ask about licensure or registration. You can check to see if a planner who offers investment advice is registered by calling the Attorney General's office at 1-800-771-

7755. You can also go to and click on Advisor Info on IAPD" on the left hand side to search for investment adviser firms. Some planners are general practitioners in the sense that they advise customers on a wide range of topics and may refer you for more specialized advice. Other financial planners focus on a very specific area such as estate planning. Make sure the financial planner you choose offers services that meet your needs. How is the financial planner going to be paid? Make sure you get payment information in writing and that you understand how your planner is compensated for services. Some planners are paid a salary if they work for a firm. If they work alone, they may charge a flat fee. Others charge a fee based on the amount of assets they manage for you. Planners who sell securities like stocks and bonds may be paid

through a commission on each transaction. Others may charge a combination of commission and a fee of some sort. Each payment arrangement may have advantages and disadvantages. It is important that you fully understand the compensation portion of any proposed agreement for planning services so you can make an informed decision and be sure you can afford the services.

Ask about any conflicts of interest. Financial planners should disclose up front any outside associations they have that could affect their judgment, or give the appearance of affecting their judgment. A description of such associations should also be given to you in writing. For example, any business the planner receives for referring you to a specific specialist when you need further help is something you should know about.

Has the planner ever been publicly disciplined for unlawful or unethical actions? Many organizations, independent boards of standards, and industry regulating groups discipline members for violating codes of conduct, and they may keep records of these transgressions. You have a right to know about any sanctions and should contact the appropriate organization with any questions.

Make sure to get as much in writing as possible. A written agreement detailing what services will be provided is good to have in case of a dispute later on.

Are you comfortable with this planner? This is something you have to decide after talking with the prospective financial planner. You are under no obligation to hire a planner after an initial meeting. Being comfortable with the person who will be giving you advice on how to manage your money is an important factor. You need to have confidence in the person and be able to trust her or him. Do not feel guilty about walking away and finding someone else if you are not comfortable working with someone.

For more help finding a financial planner, you can visit the CERTIFIED FINANCIAL PLANNER Board of Standards, Inc. website at or the Financia l Planning Association at . Both of these organizations offer the ability to search for a planner in your area. You can also call the Attorney General's at 1-800-771-7755.

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