finances in shape
Planners can help reassess goals
BY DOM YANCHUNAS
|Gannett News Service
Press & Sun-Bulletin
Stock markets are falling, tax laws change every year, college and
health costs rise and employee benefits are getting more complicated.
Many working people do not realize that professional help is available
to guide them through their own personal money maze.
Consumer advocates recommend that individuals and families hire
a financial planning consultant to develop a comprehensive plan
for managing investments, taxes, debt, insurance, college and retirement
savings and estates.
You need not be a Wall Street tycoon or lottery millionaire to
put a financial adviser to work for you. Advice from a fully certified
financial adviser usually costs $300 to $500, according to the Institute
of Consumer Financial Education.
That includes consultations, evaluation of financial needs and
a written plan, plus execution and monitoring of the plan.
"It's not just for the wealthy," said Paul M. Benesch, senior financial
adviser at American Express Financial Advisors in Johnson City.
"Just about anybody can benefit. For a few hundred dollars, you
can make sure that it's done right."
Paul S. Richard, an Endwell native who is executive director
at the California-based Institute of Consumer Financial Education,
said a consumer shopping for money advice should hire a certified
financial planner, chartered financial consultant/chartered life
underwriter or registered financial consultant.
Only those credentials ensure that the adviser is properly trained,
adheres to ethical standards, and receives the appropriate continuing
education on personal finance, Richard said.
As a general guideline, a person earning $40,000 or less annually
who does not receive an inheritance or other sudden windfall probably
will not require the services of a financial adviser, Richard said.
"The average individual does not need that sort of detailed plan,
though even a low-income person may benefit from sitting down and
getting some ideas from a financial planner," he said.
Such a consultant can be useful after a marriage or divorce, during
a crisis such as a job loss, or when a family decides to save for
a particular goal like college tuition, a vacation home or nursing-home
care. The advice can be worthwhile, too, in making decisions on
employee health or life insurance benefits and 401(k) rollovers,
Pain caused by the recent slide in the value of stocks and the
U.S. economic downturn has prompted more middle-income clients to
seek professional advice, according to the National Association
of Personal Financial Advisors.
"Especially now, when the market is down, it's a good time to see
a financial adviser and reassess your financial goals," said Benesch,
who is a certified financial planner.
Consultants can be paid in variety of ways, and consumers should
be aware of how their own adviser will be compensated, Richard said.
Some advisers work for a fee only. Others collect commissions on
securities or other products they sell. Others receives some combination
of fees plus commissions or a salary.
Advisers should be willing to disclose business relationships --
including product sales or referral fees -- that may create a conflict
of interest in handling an individual financial plan, according
to the Financial Planning Association. They also should be prepared
to disclose any disciplinary actions from government or professional
Richard recommends meeting with at least three consultants before
choosing one. Initial visits are usually free, he said.
"Just like if you're selecting a new doctor or a new church, sit
down with a few of them and see if you're comfortable," Richard
said. "It should be a personal relationship. They should become
Consumers should avoid financial consultants who:
* Seem generally untrustworthy or more interested in selling products
than meeting the client's needs.
* Call themselves a "registered representative," which means they
have simply sent a small fee to the New York Stock Exchange and
do not necessary have proper training or ethical standards.
* Are reluctant to discuss exactly how they are compensated, including
any commissions or referral fees they may receive.
* Offer to meet you at your home. The consumer should visit the
adviser's office instead to judge professionalism and inspect certifications.
* Say they will deliver product recommendations in 10 days or less.
A proper evaluation and financial plan take at least two weeks to
three weeks to prepare.
Source: Institute of Consumer Financial Education.
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