Financial planning is the practice of looking at your needs now and in future years- in depth. A financial planner should have had accounting and/or financial training in the impact of taxation, insurance, 401K options, stocks, bonds, annuities, legal and business entities, and know balance sheets, financial software and spreadsheets. He/she should have completed ethics coursework and be prepared to listen to your wishes, dreams and fears; to be your ally and answer your questions, however insignificant they might seem. Ask about his/her credentials and continuing education. Professional designations require passage of an intensive series of examinations and accreditation with ongoing peer review and policing to protect you, the consumer. Each of the specialties has a somewhat different focus. Here are a few designations you might see:
CPA Certified Public Accountant
CFP Certified Financial Planner
CLU Chartered Life Underwriter
RIA Registered Investment Advisor
What’s the difference between a broker-dealer, financial planner or one of the companies selling insurance, annuities, securities? Some are independent, some represent products or several investment options. The key is knowing your goals, and the impact upon your future. You should expect a partner in the process, and not feel rushed into something.
Most importantly, you should feel comfortable with your financial planner, and be able to sleep well, knowing you’ve made the right decisions based on the best possible information for peace of mind and security. He/she should revisit your situation periodically to analyze how changes in your status, the market, goals, and performance impact your tax and investment picture. What are the fees? Don’t be too quick to sign on the dotted line until you understand what you’re signing up for and how long and if there are penalties for early withdrawal, or changes. Your financial planner should be transparent with you.
Its important to know the impact of social security in your future, and what you’ll need to live on for the type of lifestyle you’re planning. You can outspend any level of income. We’ve all seen mega-millions lottery winners who lost it all, people who couldn’t pay the taxes on their inheritance, and athletes or movie stars who are living in a trailer park.
Do you have questions? Ask Russ about it. Be a wise consumer.