Anyone can claim to be a “financial planner,” so look for one who has been credentialed by the Certified Financial Planner Board of Standards. Planners with the CFP designation are required to put their clients’ interests ahead of their own. Many are also registered investment advisers.
What they offer
Planners can give you advice on investments, and some may offer to manage your portfolio, but they also work with clients to develop a long-term financial plan. That can include strategies for buying a car or a house, how much life insurance to buy, and how to save for retirement and college at the same time. “It’s life coaching,” says Sheryl Garrett, who founded the Garrett Planning Network, a nationwide group of planners who charge by the hour. It’s also about having an adviser always on hand for help with financial questions.
Most CFPs are fee-only and don’t earn commissions. Some charge by the hour, typically between $200 and $400, depending on where you live and the complexity of your finances. Or you might pay a one-time fee for a single project — a budget, for example, or an asset-allocation plan. Other planners charge a fixed annual fee — often called a retainer or subscription — paid monthly or quarterly. Planners working on retainer typically cost between $3,500 and $7,500 per year, depending on the client’s financial situation and needs, according to SEI Advisor Network, an advisory group based in Oaks, Pa. The going rate for planners who charge a percentage based on assets is roughly 1 percent, but it may be higher or lower depending on the firm, how much money you have and the complexity of your finances.
Sheila Padden, a CFP in Chicago, charges between $2,000 and $20,000 a year. Her $2,000 clients are typically professionals with student loans and about $100,000 in net worth; her $20,000 clients may have $5 million or more and need estate-planning help.
Best for investors who need financial guidance beyond investing
For help with a single issue — say, sorting out pension payment options — find a planner who charges by the hour. The catch with an hourly planner, however, is that you execute strategies on your own. If you want someone to do the work for you, or you have more complex needs, build a long-term relationship with a planner. In that case, a retainer model or a fee based on assets under management is more appropriate.
(Nellie S. Huang is a senior associate editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to email@example.com. And for more on this and similar money topics, visit Kiplinger.com.)
(c) 2017 Kiplinger’s Personal Finance; Distributed by Tribune Content Agency, LLC.
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