The current economic recession may have you pondering whether you have enough money saved for retirement. If you are just starting out in your profession, you may wonder if you should postpone planning for your retirement until the economy bounces back. It is never too early to plan for the future, even if you can only put a small amount into your retirement plan at this juncture.
When it comes to starting or continuing to invest in your retirement plan, you may want to consider the expertise of an investment advisor (often referred to as a broker) or financial planner. This may be a hard decision because there are so many of them. Let’s take a look at the difference between these professionals. Investment advisors are required to have licenses with the Financial Industry Regulatory Authority and register with the Securities and Exchange Commission. This distinction allows them to charge for advice or access to advice. Keep in mind that often these advisors work as an employee for large financial services or brokerage companies.
Financial planners usually help individuals with a range of money matters. When it comes to investments in the United States, you should look for a financial planner who has a Certified Financial Planner (CFP) certification. These professionals have passed an exam administered by the Certified Financial Planner Board of Standards that focuses on more than 100 topics of concern to the financial planning field. The CFP certification demonstrates a proven expertise within the financial planning profession.
How do you go about finding the right financial professional?
You will need to start by reviewing your personal financial situation, including income, debts, insurance, and cash reserve. This checklist should help you determine if an investment advisor or financial planner is better suited to meet your investment needs.
- Determine what you want to accomplish. If your goal is long term, you want an individual with a strong background in financial planning. If you want to make a little money quickly, you want an individual with experience trading stocks.
- Ask family, friends, and colleagues for referrals. For example, if a specific type of professional has been successful managing their finances.
- Ask for professional recommendations from a certified accountant or lawyer. Professional associations such as the Financial Planning Association (www.fpanet.org) and National Association of Personal Financial Advisors (www.napfa.org) may offer guidance.
- Prepare a list of questions and interview potential investment advisors and financial planners. Ask beforehand if there is a charge for this meeting.
- Find out the fee structure. Some investment advisors charge a straight commission for every transaction. Other investment ad visors may charge a fee based on the amount of money they are man aging. A financial planner may charge an hourly rate.
- Selecting a financial advisor or financial planner is a personal decision. Make sure you feel comfortable with the financial professional you have chosen to manage your investments.