More Investors Turn To Professional Planners

What’s the best investment for you - stocks, bonds, treasuries … naked options calls? Should you clear your debts first? How can you cut your taxes? How much insurance do you need? And, once you’ve done your financial best, how can you pass the most to your heirs?

If you get a headache just thinking about all this, you may need professional help.

Forty-three percent of investors used professional financial planners in 1995, up 5 percentage points from the year before, according to Yankelovich Partners, the research and polling firm. Obviously, as your assets grow and your financial life gets more complex, it’s easier to justify the cost of hiring a pro. But even if your means are modest, a professional’s fees might quickly be covered if he or she helps you avoid just a few mistakes.

Many people who eventually turn to financial planners don’t initially realize that that’s what they need, says Jeanne A. Robinson, chairman of the International Association for Financial Planning chapter in the Philadelphia area.

“The majority of comprehensive-financial-plan clients come in with a special need but end up realizing the larger picture is something they need to address,” Robinson says.

Where a planner is useful:

A planner is probably most useful if you need help with a variety of investing, insurance, estate-planning and other financial issues. If you need help in just one area, or if you have an especially complex situation in one area, go to a specialist - a lawyer for a tricky estate-planning problem, for instance.

Conversations with planners have shown that a middle-income client can pay from a few hundred dollars to several thousand dollars for an overall financial plan. There would be additional fees or commissions if you had the planner continue to advise you on investments or changes to the plan.

A recent survey by the National Endowment for Financial Education found that the typical planner’s hourly fee is $100. Of the 3,000 planners polled, 38 percent charged fees and earned commissions by selling customers securities, insurance and other products. Twenty-six percent were paid through commissions only. Another 26 percent were paid through fees only. The rest were salaried or paid some other way.

In the last few years, there’s been an increase in the percentage of planners who charge fees only. With this approach, the planner has no financial incentive to sell you products you might not need.

Since financial planners aren’t regulated the way stock brokers and insurance agents are, it’s best to look for someone with the Certified Financial Planner (CFP) license issued by the Certified Financial Planner Board of Standards. The board is a private outfit that sets standards, accredits educational programs, disciplines members and administers a qualifying exam covering areas such as tax management, employee benefits, retirement and estate planning, investment management, and insurance.

How to check:

Call 888-CFP-MARK to find out if a planner is board-licensed and in good standing. For a referral to a CFP in your area, call the Institute of Certified Financial Planners, a membership organization with about 30,000 CFPs, at 800-282-PLAN. The Institute offers a free brochure, Selecting a Qualified Financial Planning Professional.

The National Association of Personal Financial Advisors, which represents fee-only planners, also has a brochure and referral service. Call 847-537 7722

Before picking a planner, interview a few candidates face-to-face. Be sure to find out how you’ll be billed and how many meetings you’re likely to have. Make sure the planner’s background and strengths match your needs - many planners come out of specialties such as accounting, insurance or the securities industry. Talk about financial philosophy - make sure this isn’t someone who will push you to too much risk, or hold you back when you want to bet on bigger returns.