Before hiring any professional to assist you with your personal financial matters, do some homework ahead of time. Many charge for their services on an hourly basis, so it would be to your advantage to be prepared. You will need to put together this information anyway, and they will be pleased to have a client who respects them by being organized and ready to concentrate on more specific matters.

•  Be ready to explain your goals -- short, intermediate, and long term
  (Goals Table)
•  Know your risk tolerance-high, medium, low
•  Have an organized system for all your important papers
•  Make a current financial statement-Assets minus Liabilities equals Net Worth
               Assets (listing of what you own and its value)
               Liabilities (listing of what you owe and its total)
               Net Worth (subtract liabilities from assets)
• Calculate where your money goes-Income vs. Expenses
  (Making Ends Meet Worksheet)
• Read personal financial publications

Seek recommendations/endorsement of friends, relatives, colleagues, and other financial professionals. Look for someone who has the expertise, who you are comfortable with at your risk tolerance level, and whose personality is compatible. Use the "Rule of 3"--shop around, interview and compare at least three individuals. See "Ten Questions to Ask" Table.

She or he should try to clarify and discuss overall financial planning goals before trying to sell/promote investments. They should provide periodic reviews; update with changes in life situations, economic conditions, and tax laws.

Watch out for persons who use high-pressure tactics or promise unusually high rates of return. Check with our local Better Business Bureau and Office of Consumer Protection for previous complaints from other persons.

Do I Really Need to Hire Someone?

Only you can decide based on your circumstances what is best for you. Here are some questions that can help you determine if there may be situations where a professional might be needed:

• Am I confident about making financial decisions?
• Am I knowledgeable enough to develop my own long-range plans?
• Do I know enough about my investment alternatives to work effectively towards short- and long-term objectives?
• Do I expect my present income and investment strategies to provide for a comfortable retirement?
• Am I comfortable with my level of debt?
• Is this a complex legal issue or one that is likely to be taken to court?
• Is a large amount of money, property, or time involved?
• Does that matter require the filing of complex papers?
• Is my tax return complex?

What can they do?

Accountants -- generally specialize in tax advice. Some may offer more broad-based financial services and sell products to implement their suggestions.

Investment Advisors -- provide advice about securities, money management, and asset management. Some may earn commissions from product sales.

Financial Institution Investment Advisors -- sell a variety of federally insured and non-insured products. This may be done through their own company or an affiliated broker-dealer firm.

Discount brokers -- offer a range of investment products, but don't assist with providing advice on specific products.

Full Service Brokers -- provide recommendations and sell a variety of investment products. Some may provide other advisory services.

Financial planners -- assist in identifying goals and strategies to reach goals. Many also sell products to implement their recommendations.

Insurance agents -- sell insurance policies. Some may also provide financial advice and sell other products including mutual funds and annuities.

Payment Strategies Used

²  Fee - compensated entirely from fees for consultation, plan development or investment management
²  Commission - compensated from sale of financial products you purchase
²  Fee + Commission - compensated for consultation advice and commissions on recommended products
²  Salary - work for financial service institutes (banks, credit unions, etc.) who compensate them
²  Retainer - down payment toward fee for specific legal service
²  Contingent fee - percentage of monetary recovery
²  Specific job - dependant upon complexity of work involved or estate
²  Hourly rate - fixed dollar amount per hour

Alphabet Soup to You, too?

JD - Juris Doctor, attorney. Completed advanced coursework at an accredited college/university of legal studies; admitted to practice in a particular state or states
CPA - Certified Public Accountant. Passed rigorous uniform national examination; tax-related training
CLU - Chartered Life Underwriter. Proficiency in life insurance
ChFC - Certified Financial Consultant. Completed a series of courses through the American College in Bryn Mawr, Pennsylvania
IRA or RIA - Registered Investment Adviser. Anyone who sells securities or provides investment advice are required to register with the Securities & Exchange Commission (SEC) by completing a form called the ADV and paying a fee. No educational or experiential qualifications are required
MSFS - Masters of Science in Financial Services. Completed advanced degree with MSFS program in financial planning
Reg. Rep - Registered Representative. Person who passes Series 7 exam and license by National Securities Dealers (NASD) to sell securities
CFP - Certified Financial Planners

Currently, anyone can call himself or herself a Certified Financial Planner, as there are no state regulations to practice financial planning or board licensing examination. However, there are major organizations that sponsor courses and require their own examinations including: the Registry of Financial Planning Practitioners of the International Association for Financial Planners (IAFP); the Institute of Certified Financial Planners (ICFP); Chartered Financial Consultants (ChFC); and the National Association of Personal Financial Advisers (NAPFA)