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Picking the right financial planner for you.

The recessionary demons haunting today's economy may make the American dream seem more like a nightmare. As many families can attest, flat salaries and stingy interest rates are no match for spiraling costs of living. No wonder so many folks are finding it impossible to get their financial houses in order.

Just a generation ago, investment decisions seemed blissfully simple. The average person tucked dollars away in a savings account, and maybe one other safe vehicle such as a certificate of deposit [CD] or money market account. For some, stocks and bonds helped round out retirement nest eggs.

Now, however, consumers face an investment minefield, where a range of new products - from reverse mortgages to life insurance policiesthat pay "living" benefits - tempt those starved for cash. To confuse things even more, everyone from insurance agents to bank tellers seems to hawk financial products.

To cope, no doubt, manyfolks have at least considered hiring a personal financial planner - a pro who'll analyze your money mistakes and point you toward a more prosperous path. But before you jump into the rescuing arms of a planner, take a hard look at your situation. "Everybody needs financial planning," says Marv Tuttle, managing director of the Institute of Certified Financial Planners in Denver. "Whether they need a financial planner is another story."

Keep in mind that a personal financial adviser requires a substantial investment in both time and money. If all you need is a tuneup - say, some advice on selecting mutual funds or investing a $5,000 inhertance - your needs may be better met by another, more affordable professional.

But perhaps what you need is more complex - a blueprint, if you will, for college savings and estate planning. In that case, a financial planner may be for you. What do you stand to gain? A good financial planner should be able to dispense advice on a broad range of financial topics, including taxes, estates, retirement funds, insurance and investments. After a careful review of your circumstances, a planner will generally prepare a written plan that ties together allthe knots of your finances - past, present and future.

To decide whats best for your situation, consider the different types of planners and what they have to offer.

* Fee-only planners are compensated only for the advice they give, usually on an hourly basis. Though they do not sell investments, fee-only planners may recommend specific products, such as mutual funds or savings bonds, to help you achieve your financial goals. Even so, they won't see a penny in commissions. The fact that their recommendations aren't influenced by fat bonuses puts many clients at ease. But impartiality costs: Hourly rates for fee-only planners can run anywhere from $100 to $250 and up.

* Commission-only planners come in many guises. Some call themselves "investment consultants," while others say they're "financial counselors." These practitioners dispense advice free of charge, but there's a hitch: Their income relies on commissions from the products they sell, such as insurance and stocks. In the end, their services can be both costly and biased.

Consider, for instance, that commissions for most financial products range from 4% to 10% of the money invested. "A client should ask himself orherself whether the planner is recommending a product that is best for me or a product that has the highest commission payoff," says Ron Rogi, chairman of public relations for the National Association of Personal Financial Advisors in Buffalo Grove, III.

* Fee-and-commission planners charge a fee and accept commissions, too. They typically charge for an initial consultation and recommend specific products to suit your needs. Keep in mind, however, that most fee-and-commission planners earn fullythree quarters of their incomes from commissions.

* Other financial advisers may work for large corporations that offer financial counseling to their workers, free of charge. Check to see if your company offers any financial seminars (see sidebar, "Teaching Fiscal Awareness-). Another affordable afternative to formal planning is available from firms such as New York-based Pricewaterhouse. For a bargain $375, the accounting firm's retail outlets will prepare a customized financial sketch, figuring your networth and outlining specific strategies for saving, investing and reducing taxes.

Picking a personal financial planner requires both diligence and caution. Largely unregulated, the field attracts scores of people who masquerade as financial experts. Crack open your yellow Pages. Chances are, only a handful of those listed as financial planners are bona fide pros. Indeed, investment scams are so rampant that they bilk unsuspecting clients for about $10 million a year, says the Washington, D.C.-based Consumer Information Center.

Your best defense against ripoffs? Seek recommendations from your friends and family, as well as professional associates like your lawyer or accountant. Next, make sure that a planner holds the proper credentials.

While there are a number of designations for financial planners, the most widely recognized is the certified financial planner (CFP). Bestowed by the Denver-based International Board of Standards and Practices for Certified Financial Planners Inc.,a CFP ensures that a planner has solid financial work experience (one year for MBAs, but more for others). To qualify,planners must complete two years of course work and ace a 10-hour exam on such topics as tax rules, investment planning, employee benefits and estate planning.

Another well-regarded certification is the chartered financial consultant (ChFC), offered by the American College in Bryn Mawr, Pa. To earn this designation, a planner must complete a series of 10 courses on all aspects of financial planning and have a minimum of three years business experience.

Most industry organizations require members to meet key qualifications. Your planner should belong to at least one of the following groups: National Association of Personal Financial Advisors in Buffalo Grove, III.; Instftute of Certified Financial Planners in Denver; or the International Association for Financial Planning (IAFP) in Atlanta.

* In addition,if you plan to buy investments directly from your planner, make sure he or she is licensed by the National Association of Securities Dealers.

Regardless of the type of planner you choose, you have every right to be happy with the service you receive. If not you have several options, especially if you suspect your planner of unethical behavior. For starters, you can call the IAFP (404-395-1605). If your planner is a member, the association will take the matter up with its ethics committee. You can also contact the International Board of Standards and Practices for Certified Financial Planners (303-830-7543), which can revoke a CFP'S certification. If your gripe concerns securities transactions (i.e., stocks, bonds or mutual funds), you can file a formal complaint with the National Association of Securities Dealers (202-728-8000).

Keep in mind: Successful financial planning is a year-round process, not a one-stop chore. To get organized, remember these three helpful steps:

* Clearly mark all financial records and keep them handy. Make sure that bank files, employee benefits booklets, W2 forms and wills, insurance policies, titles and mortgage information are all easily accessible. Also, file copies of your tax returns along with supporting documents. (Keep returns going back five years and toss the rest.)

* Clarify your present situation by collecting and assessing all relevant personal financial data, including bank, brokerage and credit card statements.

* Identify both financial and personal objectives. Do you plan, for instance, an early retirement? Or, are you bracing for college tuition billsforthree kids? Your savings/Investment strategy can't be fleshed out until you've set specific goals for yourself and your family. As they change, so must your financial plan.

If all this preparation sounds daunting, relax. Several low-cost publications are available to help beginners sort out their finances. Consider the Consumer Guide to Financial independence, designed to help readers broadly assess their financial goals. To get a free copy, write to the International Associabon for Financial Planning, 2 Concourse Pkwy., Suite 800, Atanta, GA 30328. Another resource is The Consumers Almanac, a month-to-month planner complete wdh budgeting work sheets. Send a check for $2 to the American Financial Services Association, 919 18th St. NW, 3rd Floor, Washington, DC 20006.

LeCount Davis:



After 10 years as an auditor for the Federal Housing Administration, LeCount Davis knew he wanted to focus his knack for numbers on people. I've always wanted to do the complete financial picture," Davis explains. By 1978, after a three year stint in organized labor, he earned his spurs as a certified financial planner.

Today, Davis is a fee-only planner who practices at Financial Services Network inc., the Washington, D.C. firm he founded in 1982. There, he works with a group of accountants, lawyers, real estate agents and stockbrokers to create the best financial plans for his clients.

"Accumulation of wealth doesn't happen by accident," says Davis, whose average client has a household income of $70,000 to $120,000.

"But most people who come in don't know what they need." To put them on the right track, Davis offers clients a free half-hour consultation. Once he takes them on (at $100 an hour, for a minimum of five hours), Davis pours over their past tax returns and assesses such things as the client's "investment IQ." risk tolerance, asset allocation and insurance coverage.

"From there, we determine what products a client might need and help them implement a plan," Davis says. The average workup, he says, takes about 20 hours and requires an annual two-hour follow-up. "That way, we can find out if the plan is working, or needs to be revised."

Mabel T. Flowers:

Teaching Fiscal


Mabel T. Flowers has turned financial planning into an educational training business. Her job: to teach company employees about the rigors of money management.

Flowers founded her company, Financial Planning Awareness Inc.(FPA), back in l987 to create and run workshops and seminars in financial planning. The Southfield, Mich.-based firm serves the employees of several Detroit auto giants, who provide Flowers' services to workers free of charge.

Flowers' courses - taught by a staff of certified financial planners in four midwestern states - include such topics as "Build Your Nest Egg," "Cut Your Taxes" and "The Credit Counselor." In fact, Flowers says she is the only financial planner in the state of Michigan qualified to do credit repair.

We try to teach people new ideas, and how to evaluate their actual needs," Flowers says. Her average student? A skilled laborer who earns between $30,000 and $70,000 a year.

In 1983, an appetite for investing inspired Flowers, a former teacher, to train with IDS Financial Services, a division of American Express Corp. Soon afterwards, she moved on to the then Detroit-based Mutual Services Corp. in 1987, she became a certified financial planner.

Flowers' goal is to train people so that when they do go to a personal financial planner, they'll know best how to communicate their needs.

Charles Ross:



Calling a TV evangelist a "local preacher" is akin to comparing Charles Ross to a typical financial planner. Neither the evangelist or Charles Ross actually has a flock. Instead, their gospel floods the airwaves.

Ross is president and CEO of Financial Media Services Inc., an Atlanta-based company that provides personal financial education and information to consumers through television, radio, print and seminars.

Using the media as a conduit for his message about financial planning is not out of the league for the University of Georgia graduate, who holds a bachelor's degree in journalism. Ross worked in a bank for a while then dispensed advice for a local savings and loan.

While working as a banker in the |80s, Ross started informal seminars for his clients, helping them wade through the complexities of stocks, bonds and annuities. His talents soon made their way to the tube, and in 1986, he launched a two-minute daily financial planning segment on the No. 1 urban station in Atlanta, WVEE-FM.

Today, Ross' program, Your Personal Finance, is broadcast on some 75 stations nationwide. He also pens a newspaper column and continues to do seminars. In between gigs? He's found time to write a book, The Best of Your Personal Finance.
COPYRIGHT 1993 Earl G. Graves Publishing Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:includes profiles of planners LeCount Davis, Mabel T. Flowers and Charles Ross
Author:Bergsman, Steve
Publication:Black Enterprise
Date:Apr 1, 1993
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