WORKING WITH AN ADVISER

Financial advisers can help you put your financial life in order,but you need to be alert when choosing and using an adviser. Somequestions you can ask: What financial planning services can the adviser provide? Someplanners are specialists; instead look for advisers who offer a broadrange of services.

Will the adviser have direct access to your money? Direct accesscreates greater liability for the planner: make sure he or she isbonded or insured. Does the adviser sell products and services? Selling productspresents a conflict of interest to someone who also sells services;avoid planners who tout their own products as the solution to allfinancial problems. But putting a plan in place usually involves thesale of some products. If the planner sells you a product recommended in your plan, howwill be or she be compensated? Make sure all compensation plans aredisclosed. Will any commission on the sale of a product offset the financialplanner's fee? Be cautious of such plans; they cloud yourobjectivity and make you favor products sold by the planner. Retainthe right to buy any recommended products from sellers other than theplanner. Who will review the information and present the financial plan?You should know who will be handling your account. If it is somebodydifferent from the person who reviews client affairs, make sure thatperson can answer all your questions. How will the planner be paid for the plan and for follow-up? Makesure all fees are explained in advance before signing any agreements. What kind of follow-up can be expected once the financial plan isdeveloped? Depending on your situation, follow-up sessions can berequired anywhere from monthly to annually. How will the planner help implement the plan? Many plans failbecause the financial planner doesn't help beyond formulating theplan. The planner should be involved in implementation. If the planner is unavailable to service the account, who will?Continuity is important to planning; make sure the plan addresses it. What resources, staff and facilities are available? Backuppersonnel, equipment and resources are important to financialplanning; they broaden knowledge and expertise. What are the planner's liabilities for the recommendations made?Know exactly how strongly your financial planner is willing to standbehind his recommendations. What action can you take if the recommendations don't work? Knowwhat courses of legal action or ethical action through professionalorganizations are available for malpractice or negligence. What are the planner's education and business credentials?Appropriate education and experience are critical to financialplanning. Ask about certifications as well. How does the planner keep up with changes in regulations andfinancial developments? Planners should keep up with developmentsthrough continuing education, publications and referral services. Has the planner ever been censured, suspended or reprimanded? Theplanner should make full disclosures on this subject; if he does not,you may have the right to invalidate any agreement upon learning ofregulatory action against the planner.

SOURCE: From the "Real Life, Real Answers" series published byHoughton Mifflin Co., Boston. Copyright (c) 1990 by Lee SimmonsAssociates. Reprinted by permission.