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COVID-19 FAQsKeybase DocumentsFinancial Planning FAQs

Financial Planning FAQs 


1. How is a Financial Planner compensated?

A financial planner may be compensated in one of three ways:

The first is on a fee only basis. The trailer/service fee is based on the value of the client's assets and/or income, or on an hourly rate.

The second is on a fee and commission basis. The fee is determined by the amount of work involved in designing the client's plan and continuous updating. The commissions are derived from the purchase of financial products from the planner if the client implements the product portion of the program through the planner.

The third is on a commission only basis. The commissions are usually derived from the purchase of financial products from the planner. Regardless of the method of compensation, make sure you know how the financial advisor is compensated at the start of the meeting.

2. How do I know if I need a Financial Planner?

People hire financial planners for many reasons. Here are some questions you might ask yourself to help determine if you need financial advice:

  • Do you have the time to attend to your personal financial affairs?

  • Are you confused about conflicting financial advice from several sources?

  • Do you feel you are paying too much tax?

  • Are you unsure about where to invest your money?

  • Do you feel that you can't make ends meet?

  • Do you feel that you can't save any money?

  • Has there been a recent change in your life which could affect your financial future, such as retirement, job loss, an inheritance, an addition to your family, or loss of a spouse?

These are but a few reasons you may wish to use a financial planner.

3. How do I choose a Financial Planner?

Before choosing a specific financial planner it is essential that you meet to determine how well you get along. Ask for a short meeting. Discuss how the planner would work with you. Ask for any material the planner has for you to review prior to the meeting. Often this will answer many questions and give you a basis for comparison with other planners you have contacted. Ask about the planner's background. Both the education and experience are important. Ask how long the planner has been counseling clients on total financial plans and ask about any other relevant education the planner has. Does he or she have any professional accreditation? Ask to see a sample plan of someone in circumstances similar to your own. Does the planner specialize in a particular kind of client and what professions, incomes and age groups do they focus on? This is your life savings, so the bottom line is TRUST.

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