Answer

A financial planner, investment advisor, or financial consultant could advise you and help implement a financial plan for you. Financial planners can charge for their services through a flat fee, a fee plus commission, or on a commission arrangement only. A fee only planner will charge a flat fee (initial plus retainer) only and not receive any commissions from the investment products that are used in implementing the plan. Hence, they should be more objective. However, since they will not receive any compensation from investment products their fees will generally be higher than a fee plus commission planner. Fee only planners represent a relatively small segment of the advisor population.

 

A fee plus commission planner is paid from both a flat fee plus commissions from the products that are used. They may not be completely objective as part of their compensation is received from commissioned sold products.

 

A commission only advisor only receives compensation from the products that are sold. For this reason they may be the least objective.

 

However, there have been no studies that definitely prove which type of advisor as a group provides the most value when considering rates of returns and after factoring in all fees.

 

Some general fee guidelines are that an investment advisor will charge 1 - 1.5% of assets that are under management on a discretionary basis. Also, if a written financial plan is produced the fee for that may range from $250 - $5,000 depending on the complexity of the plan and the type of planner (fee only or commission only).

 

If you intend to have an advisor manage your investments on a discretionary basis (meaning they make all investment decisions without consulting with you) then one question to ask is does the fee include the commissions for executing any trades. If it does not then ask whether the commissions are discounted and how much (ask for a fee schedule). Also, ask whether the advisor is a registered investment advisor (RIA).

 

Other designations you may want to look for in order to determine an advisor's educational credentials are CFP, CHFC, or CLU (there are also other ones that are credible but these are the most well known).

 

You could start your search by talking to friends and asking for referrals if they are satisfied with their advisors. Generally, you would want to work with larger firms as they will have the broadest array of services and employ specialists in different areas. I would suggest interviewing a number of firms to see which firms you feel most comfortable with.

 

The most important factors are you must be able to have trust in the advisor (meaning he/she is ethical and you have confidence that the advisor is knowledgable and has your best interests at heart) and that you can develop a financial relationship based on the advisor's personality and demeanor.