Building Wealth: How to Choose a Financial Planner

Posted by myarticlenetwork on December 10, 2009

Unfortunately, some people don’t begin planning their retirements soon enough, nor do they fully grasp the principles of growing retirement income. This is due in part to the fact that most people don’t have access to reputable retirement investing advice. It’s not that there isn’t good financial investment advice out there, but payment to a consultant is usually involved if you want custom information. So, many people opt to go it alone, only to discover too late that they won’t have what they need to retire. This is why experts recommend using financial pros to develop retirement plans. And since it is your hard-earned money, you owe it to yourself to do your homework first so you can ask intelligent questions questions of the financial advisor and understand the answers. Learning the financial ropes a bit in advance can also lower the financial consultant’s bill.

Here are some of the subjects you should know before you pay someone for financial advice:

How life insurance impacts your financial future
Some people don’t need information on level term insurance and other forms of insurance protection because they don’t have dependents that make life insurance necessary. But those who do need it should choose wisely. Knowing the difference between whole life, term life and variable universal life (VUL) will help you choose the right option for your circumstances. And let me give you one piece of information right out of the gate: cash value policies, such as whole life and universal life can usually be counted on to produce a bad return on investment and will often leave your loved ones with inadequate coverage. So you should keep that in mind when you speak to a financial consultant.

The difference between load and no-load mutual funds
Some financial advisors work on commission only, so it’s in their best interest to suggest “load” funds (those that have service fees). Sometimes you’re better off paying by the hour for financial consulting, so you can get objective advice. If you study the difference between load and no-load funds, you’ll see why.

Have an idea when you will retire and how much you’ll need to save
Before you meet with a financial planner, it would be prudent to know approximately when you want to retire and how much money you think it will take to maintain your lifestyle. That will help her form a plan.

Once you’ve done the homework above, you’ll want to to do just a little bit more: make some inquiries of your friends and family if they have any recommendations before you choose a financial planner. Once you have those recommendations, see how well that person has done with his own finances. If they haven’t been able to do it for themselves, they won’t be able to do it for you!