Learning Library

Key Points

• What is a Financial Professional?
• Your Guide in a Complex World
• The One-on-One Relationship Focused on Your Success
• The First Meeting: Come Prepared
• Your Needs and Goals Shape the Strategy/Plan
• Your Key to Success: Take Charge
• Points to Remember  
  
  

A flurry of new investment products, the emergence of global investing, the shift from company-funded pension plans to employee-driven retirement plans (like 401(k) plans) and uncertainty about Social Security have all contributed to the increased need for accurate financial information.

No matter what your level of investment experience or sophistication, you can benefit from developing a relationship with a financial advisor.

What is a Financial Professional?
A Financial Professional is a little bit like a financial "doctor." A qualified financial professional is trained to help you analyze your personal financial situation and work with you to prepare a program designed to help you meet your financial goals and objectives.

The experience and qualifications of financial professionals vary. There are no minimum education requirements that must be met in order to be a financial professional, so you’ll want to inquire about experience and training before selecting one.

Financial professionals can offer fee-based or non-fee based financial plans, depending on the qualifying courses and exams they completed.  In addition, three of the most common and recognized designations within the industry are: CERTIFIED FINANCIAL PLANNER^TM (CFP^®), which is awarded by the Certified Financial Planner Board of Standards; Chartered Financial Consultant (ChFC) and Chartered Life Underwriter (CLU) both professional designations of The American College.

Financial professionals may also be trained as accountants, lawyers, insurance agents, or registered representatives— all professions that have a relationship to different aspects of your financial well-being. Because of this association with another profession, a financial professional frequently will focus on a specific type of financial planning, such as retirement planning or estate and trust planning.

Financial professionals are usually compensated in one of three ways:

• Charge a fee for their time and fee based financial planning service, but sell nothing;
• Provide a complimentary needs analysis, but receive a commission on transactions involving investment products such as mutual funds, stocks, bonds, and insurance products; or
• Charge a fee for planning services in their capacity as a fee-based planner and make commission on transactions in their capacity as an insurance agent and/or registered representative.

Your Guide in a Complex World
When people venture into the complex and confusing world of managing their own financial affairs, they often need professional guidance.

A financial professional will be able to help you assess your risk tolerance, analyze your resources and current asset allocation, take into account your tax liability, and then make investment recommendations sometimes in the form of a written financial plan that will help you to achieve your goals. The plan may help ensure that your current and future assets are used to your advantage given your current financial situation and your financial goals.

The One-on-One Relationship Focused on Your Success
It doesn’t matter whether concerns about planning for retirement, college funding, or changing jobs have led you to consult a financial professional, but once you have established the relationship, you will probably find that all these issues are interrelated, so there may be many ways you can benefit from working together.

At your first meeting, you and your financial professional together will identify your financial needs and investment goals. Although it sounds simple, this can be harder than you anticipated. Your financial professional will be able to ask you the right questions to help you clearly define your goals.

	Building a Good Relationship Knowing what to expect from your financial professional will help establish a good working relationship. Here are some questions you might ask. What is your educational background? What (if anything) did you do before becoming a financial professional? Will you offer specific or general recommendations? Do you help to implement these recommendations? Are you a practicing professional in another area, such as law or accounting? How do you keep in touch with your clients? Do you initiate annual reviews, or should I?

The First Meeting: Come Prepared
To prepare for your first meeting, ask your financial professional to tell you which documents and information you should bring. These may include essential documents such as wills, copies of insurance policies, pension information, and investment account statements.

You should also be prepared to at least discuss the following topics:

Retirement —

• When do you plan to retire?
• In what style do you expect to retire?
• Do you have any retirement savings already in place?

Income and Savings —

• What is your current income and rate of savings?
• Do you anticipate a change in jobs, leaving a job to stay home with children or starting your own business?

College —

• Do you have plans to fund or help fund your children’s education?
• Are you planning on helping them get established as adults?

Disasters —

• Are you prepared for the unexpected?
• If you lost your job, had a serious accident, or contracted a serious illness, would you be prepared financially?

Estate Planning —

• Do you have a will?
• Have you considered the tax implications of transferring your estate to your heirs?

Your Needs and Goals Shape the Strategy/Plan
After you and your financial professional have jointly established your investment goals and objectives, your professional will work with you to create a plan for you and review it with you. The plan may include making sure you have sufficient insurance, that you have cash reserves to meet unexpected financial needs, and that specific short- and long-term goals are provided for. The plan may also involve reallocating some or all of your assets into more suitable investments that fit your risk tolerance and your investment goals. In addition, it will recommend where to invest future assets (regular savings or lump-sum payments), and how much you need to save to achieve your financial goals.

After you and your financial professional have agreed on a plan of action and implemented it, you will want to schedule annual financial reviews to make sure the plan still works to your satisfaction and that none of your goals have changed over time. And if you have major changes or events in your life, keep your financial professional informed of these. Such examples would include a change in marital status, the birth of a child, a change in income, or an inheritance.

Your Key to Success: Take Charge
To work successfully with a financial professional, you need to build a solid relationship based on trust and mutual respect. And most important, you need to be involved. The least successful relationships are those in which the client is not very involved. By deciding to consult a financial professional, you have begun to take charge of your finances. A financial professional will help you identify your investment goals and create a plan that will help achieve them. In the years to come, this professional can become a trusted friend and confidant. And together, you will have implemented a strategy to help you maximize the earning power of your assets so that they are working toward creating a secure financial future for you.

Points to Remember

1. A financial professional has been trained to analyze your personal financial situation.
2. Financial professionals can earn designations by completing accredited courses of study.
3. There are a number of ways you can benefit from working with a financial professional.
4. The first thing you and your financial professional will do is uncover the strengths and weaknesses of your financial situation.
5. Your financial professional must have an accurate picture of your financial situation to help you create a workable financial plan to follow.
6. Be prepared to answer, or at least discuss, questions about retirement, college savings, and your estate, among others.
7. Involve your financial professional in any investing decision that comes along.
8. Knowing what to expect from your financial professional is an important first step in establishing a long and prosperous relationship.

CFP^® and CERTIFIED FINANCIAL PLANNER^TM are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individual who successfully complete the CFP Board’s initial and ongoing certification requirements.

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