"Get Your Finances Ready for Retirement"- Choosing A Financial Planner For Your Retirement Needs
Monday, October 13, 2008SUSIE GHARIB: In these times of uncertainty about the economy and the markets, many people are confused about how to manage their finances and where to turn for professional help. As we continue our series, "Get Your Finances Ready for Retirement," Joe Collum reports on how to find a qualified financial planner.
JOE COLLUM, NIGHTLY BUSINESS REPORT CORRESPONDENT: Carolyn Woodley-Horne is thinking about retirement, so she has come to this financial planning clinic in Washington, D.C. Her objective, to find a financial planner to get her through her retirement years.
CAROLYN WOODLEY-HORNE, PRE-RETIREE: Someone not to tell me what to do, but to give me more information so I can make a more informed decision of what to do.
COLLUM: But as Carolyn learned, finding the right financial planner for your retirement is easier said than done. MarketWatch senior writer Chuck Jaffe, who wrote a book on that subject, says that one of the biggest mistakes people make is hiring the first financial adviser they run into.
CHUCK JAFFE, SENIOR COLUMNIST, MARKETWATCH: The first guy you meet is always going to sound great, because he's going to talk or she's going to talk about all of the things that have made you say, hey, I need somebody. They sound fabulous, and you have no basis for comparison.
COLLUM: It's true anyone can call himself or herself a financial planner, so that doesn't count for much. Being a certified financial planner carries more weight, because it indicates the adviser has had extensive education and passed stringent tests. But, beyond CFP, there is a whole alphabet soup of other designations out there. Lorry Ciporkin is a CRFA, certified retirement financial adviser. She also has CHFC, CLU, and CLTC after her name, all appellations certifying her expertise in areas ranging from cash flow strategies to insurance planning. But while those initials mean something, she says what really counts for her clients is her 30 years of experience.
LORRY CIPORKIN, CIPORKIN CARE FINANCIAL: I think that the alphabet soup, all of the credentials, is a distraction, and we are not getting to the real core of what the real issue is, which is getting them the answers that they need.
COLLUM: Adding to the confusion is that while there are many legitimate credentials, some designations have been challenged as being of questionable value. Patricia Struck, former president of the North American Securities Administrators Association, says that poses a big problem for state investment regulators.
PATRICIA STRUCK, WISCONSIN SECURITIES ADMINISTRATOR: You can go online and you can take a couple of hours of courses that will make you really well- qualified in marketing your services. In other words, you're good at selling yourself, but don't have any additional expertise in the issues that really face retired people.
COLLUM: To find a good financial planner, you can start by looking at established professionals in your area, arrange to meet several individually, and as Kerry Hannon of U.S. News & World Report recommends, don't be afraid to ask pointed questions.
KERRY HANNON, U.S. NEWS & WORLD REPORT: You need to ask them, what is their education? How did they study to become a planner? Why did they become a planner? And if you can get the credentials from them beyond just those letters tacked on, that's critical.
COLLUM: Another critical matter is to find out exactly how the planner will be paid. Fee-only planners collect all of their fees from clients, charging either by the hour, or a percentage of the clients' assets. Other planners often get commissions from the investment products that they sell. And to be sure the financial adviser you're considering doesn't have a checkered past, it's a good idea to do a background check. You can contact your state securities regulator's office, or cal the Financial Industry Regulatory Agency's broker/dealer hotline at 1-800- 289-9999. Joe Collum, NIGHTLY BUSINESS REPORT.
