If you have 401k plans floating out in the netherworld from past employers, have money to invest but don’t know where to put it, or haven’t even started planning for retirement, a financial planner can help you come up with a game plan for your money so that you won’t be in debt with nothing in savings by the time you retire. You have to be careful though. Some financial planners are like family counselors and have your best interest in mind, where as others are more like used car salesman and are more interested in earning a commission by selling you a financial product than actually helping you.
Finding a Winner
So how do you separate the sheep from the wolves? There are very few financial planners out there that don’t actually sell financial products, so it’s unlikely that you’ll find one that doesn’t sell anything, but if you can find one who’s a fee-only planner, you’re in luck. These types of counselors are paid a flat fee for their services and won’t receive any commission if they sell you on a financial product. This means they won’t have any incentive to place you in financial products that are inappropriate for you.
You should also find a counselor that you can relate to and communicate with effectively. Find one that, as Dave Ramsey says, has the heart of a teacher and will walk you through the process, teaching you as you go, so that whenever you do make a move financially, you will do so because you understand what you’re doing and believe that it will make you more money, not because you have trusted someone else to make the decision for you.
Warning Signs
If you’re already meeting with a financial counselor or plan on meeting with one, there are some warning signs that you can recognize to determine if you should find someone with your interest more in mind. If a financial planner or counselor mentions the word variable annuity or an indexed annuity you should run out the door as fast as you can. Nobody buys these products on their own. They’re very high in fees and commissions and are almost impossible to get out of, but some financial planners sell them because they can make a lot of money in commissions on them, even when they aren’t in the best interest of their customers.
So how do you go about finding a quality financial counselor?
There’s a national organization for financial planners, called the National Association of Personal Financial Advisors (NAPFA), which will help direct you toward a quality fee-only financial planner in your area. You can find one on their website at http://www.napfa.org/. Another good resource are the financial planners that are associated with Financial Peace University / Dave Ramsey’s endorsed local provider program. These financial counselors and other professionals are individually vetted so that you know they’re on the up and up.