TUPELO – Whether you have $1,000 or $1 million to invest, whom you choose to handle your money is just as important as determining what your investment portfolio look like, financial planners say.
But choosing a planner isn’t necessarily easy.
“Trust and confidence are in rare supply these days, and rightly so,” said Eleanor Blainey, consumer advocate for the Washington, D.C.-based Certified Financial Planner Board of Standards. “You’ve got the recession, you’ve got the markets and we’ve had examples of how money has been mishandled.”
And with thousands of financial planners overseeing billions of dollars on a daily basis, investors have a deep pool from which to choose.
“The bad news is that just about anyone can hang a shingle and say they’re a financial adviser,” Blainey said. “But the good news is that there’s a way to identify who’s fit. A financial planner is a good choice for a lot of people … there’s a planner for every age and at every stage of a person’s life.”
The CFP Board recommends investors ask questions, and plenty of them.
“If anything, investors don’t ask enough questions,” Blainey said.
Robin Haire, of Haire Wealth Management, said financial planners should have no objections to answering any question. A critical question that investors shouldn’t be too embarrassed to ask about is how the planner will be paid.
“Clients should always ask how the financial adviser is compensated,” he said. “Is it a commission, is it a fee, is it both? An adviser shouldn’t hesitate to answer.”
Scott Reed of Hardy Reed Capital Advisors in Tupelo said his firm charges a fee.
“Most people are selling a product, and there’s nothing wrong with that,” he said. “But if you’re selling a product, then your allegiance could be to the product and not the client, and that can become an issue.”
That’s why it’s important to ask how your financial planner is paid, Blainey said.
“Have them spell it out for you, so you’re comfortable with where your money is going,” she said.
Bob Chesnut and his son, Rob, of Ameriprise Financial in Tupelo, said financial planners can offer a myriad of services, and investors should ask what services are available to them and how much they’ll cost.
“It’s also important to check out their credentials, too,” Rob Chesnut said.
A number of Web sites offer investors free information about individual financial planners as well as companies.
Whomever you choose to invest your money, it’s important that it’s someone you can trust, someone who will take the emotion out of investing, planners say.
Emotions can lead to rash decision-making, and that’s usually not a good idea when it comes to money.
When the economy sours and the markets swing wildly, it’s tempting for investors to panic.
The CFP’s Blainey said financial planners take the emotion out of investing, looking instead at the long-term impact.
It might be tempting to play the markets yourself, but Blainey said financial planning is not a do-it-yourself project.
“This is about money management, it’s not something you put together in your backyard,” she said. “This is about your financial future. There is a lot of emotion attributed to money, namely greed and fear. But an financial planner who has the credentials, who has the expertise, can guide you and work with you. Even a brain surgeon wouldn’t perform his own brain surgery.”
The Chesnuts say that investors should plan for the short term (less than two years), mid-term (2-5 years) and long-term (more than five years). Planning differs in each stage, and depending on one’s needs, a portfolio can vary greatly from investor to investor.
“That’s why it’s important to sit down and talk to your financial planner, and to talk to him or her regularly,” Bob Chesnut said.
“Reality doesn’t always fit the plan, but it’s easier to adjust to a plan than to never have planned at all,” he added.
Contact Dennis Seid at (662) 678-1578 or email@example.com.
Dennis Seid/Daily Journal