a large company, my employer recommended a financial planner, but there were 400 employees, so I was just a number to this planner. Once a year, he’d send out a checklist in the mail. It was very impersonal.”
In a search for someone better, Washington followed a client’s referral to Reginald Jackson C.F.P., a local financial planner in Redlands, California. “From the start, Reggie showed more of an interest [in my personal finances],” says Washington. “He walked me through the planning process, determined my risk tolerance, and provided a road map for my entire family.”
Washington’s family, it turned out, was not especially eager to take risks. “Reggie has recommended a number of mutual funds,” says Washington. “They’re more diversified so we don’t take as much of a hit if one company runs into trouble.”
Washington began working with Jackson in 1998, near the peak of the tech-stock boom. “Even back then,” Washington says, “Reggie did not advise placing a large portion of our investments in tech stocks. Instead, he suggested a mix of stock funds and bond funds, including some international funds. That asset allocation has generated gains for us, despite the recent bear market. Now, when tax preparation clients ask me for investment advice, I send them to Reggie.”
When searching for a trusted advisor, keep these points in mind:
Know which type of professional you really want. Certified financial planners (C.F.P.) advise clients on personal finance matters and are certified by the Certified Financial Planner Board (www.cfp-board.org).
Chartered financial analysts (CFA) have at least five years experience and are required to pass three examinations, proving they know sound investment-management techniques. CFAs are certified by
the Association for Investment Management and Research (www.aimr.com).
Brokers buy and sell securities for others. They are licensed by the Securities and Exchange Commission or other state regulatory agencies. These professionals charge a fee or receive commissions from their clients. Make sure you choose the proper professional for your needs.
A good advisor finds the facts first. “If someone’s advice is always to buy something, that’s a warning sign,” says Brackens. Instead of tossing a sales pitch with the first ball, many advisors have prospective clients fill out a brief questionnaire about their financial and personal situation before the first meeting.
“That saves time for both of us, and allows me to collect the data,” says Jackson. “My job is to help clients prioritize their financial issues and tackle them individually, starting at the top of the list. One of my new clients wants to buy a house, so we’re starting there, discussing his options, and spending less time on his investment portfolio.”
Do a background check. Prospective clients should ask questions of advisors, too. “Find out how long they’ve been doing this,” says Jackson. “Maturity and experience can be very helpful, especially in the climate we’re now experiencing.”
Kevin Davis advises investors to meet with more than one person before picking a financial advisor. “Ask about his or her background,” he says. “A person who has worked in insurance, for example, might have