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Honestly, trust is essential for money planner(Omaha World-Herald (NE) Via Acquire Media NewsEdge) Jan. 30--People hiring a financial planner should expect objectivity, honesty and professionalism, but services and costs typically are up to the client and the planner to work out, experts said. "I don't think any consumer should settle for less than what is maintaining and earning trust," said Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards. With New York investment manager Bernard Madoff allegedly perpetrating a $50 billion Ponzi scheme and the financial markets dropping more than 30 percent over the last year, people are questioning everything that has to do with financial advice, Blayney said. Best thing for consumers to do in this environment: Ask financial planners lots of questions, including how they are paid and what they will deliver in exchange for their fees. Any promises of high returns should be considered skeptically, Blayney said. The value in hiring a financial planner lies in mapping out financial goals and suggesting realistic steps for meeting them, such as investing money to help pay college education expenses for children or for retirement or buying a house, Blayney said. "I think it's a sense that the decision-making is not irrational," Blayney said. "It's a sense of control and confidence in meeting the future." Mark Berg, a financial planner in Wheaton, Ill., who is education director and on the board of directors of the National Association of Personal Financial Advisors, said planners generally provide investment advice and oversight. They help find the best ways to invest and to preserve and distribute the money made through investments, Berg said. Financial planners who buy and sell stocks and insurance products need to pass regulatory and professional exams. Brokerage companies oversee many financial planners, as do federal and state regulatory agencies such as the Securities and Exchange Commission and state securities and insurance departments. The relationship between a customer and a financial planner might be compared to what is experienced with an attorney, accountant or even a doctor, Berg said. "Your discussions don't just revolve around dollars and cents, they revolve around life," Berg said. Clients determine how much time they want to spend with a planner. For example, some customers might want to meet on a quarterly basis, while others might skip a quarter or two if nothing has changed, Berg said. "Sometimes the client drives fewer meetings instead of more," Berg said. Blayney said people looking for a financial planner should interview several and ask them what their clientele is like. An investor with $100,000 might not want to be with a firm whose average client is worth more than $500,000 or $1 million, she said. "I may be a very, very small fish in this bigger pond," Blayney said. "It's important to determine if you are the type of client in size and particular issues that the adviser works with routinely and enjoys working with." Financial planners are paid in a variety of ways, including commissions charged on financial products; hourly rates; annual fees based on percentage of assets under management; or a combination of fees and commissions. Competition among financial planners tends to keep fee-based annual charges at about 1 percent to 2 percent of assets under management, depending on services offered. Smaller percentages are charged on larger portfolios. An hourly rate could vary from $100 to $275 an hour, depending on the financial planner's experience and the complexity of the holdings being managed, Berg said. People should ask which billing method is used, how much they will be billed and what services will be offered, Berg said. Services that might be expected under an annual fee structure include quarterly reports on investments, annual or more frequent face-to-face meetings and periodic commentary on conditions in the stock market, Berg said. Generally, a larger portfolio of assets takes more time for planners to set up, monitor and talk about with clients because there are more options for investments, Berg said. Tim Harrison, a wealth management adviser with Northwestern Mutual, said his firm's services include insurance, investment and estate planning. Fees vary depending on the client's needs, Harrison said. Clark Bellin, a financial adviser with Mundy & Associates in Omaha, said his firm charges from 0.5 percent to 1.5 percent based on how much a client has invested. The fee includes transaction costs, and no commissions are charged, Bellin said. "This fee also covers ongoing monitoring of financial plans and our interaction with accountants and attorneys," Bellin said. Bellin said his firm charges an hourly fee when it is involved in estate planning or business succession planning. Todd Feltz, president of Feltz WealthPlan, said his firm generally charges about 1.4 percent on assets being managed the first year and reduces that fee in years following. "The higher fee the first year takes care of transfer and setup of accounts and also takes care of our time in implementing and coordinating the financial planning process," Feltz said. --Contact the writer: 444-1117, [email protected] To see more of the Omaha World-Herald, or to subscribe to the newspaper, go to http://www.omaha.com. Copyright (c) 2009, Omaha World-Herald, Neb. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |