NEW YORK – Fully two-thirds of baby boomers plan to retire in the next 10 years and many are seeking financial planners to help them accumulate what they will need when the time comes. But not all "certified" advisers are what they appear to be, says Robin Davis, a certified financial planner and author of the book "Who's Sitting on Your Nest Egg?"
With financial planning certification programs proliferating, it can be hard to tell what level of training your planner has -- and whether he or she has your best interests at heart.
The brief quiz below can help you distinguish between a qualified financial counselor and what Davis refers to as financial "product pushers:"
Did your planner ask to see your tax return? A "no" answer is a red flag, warns Davis. Your tax return includes data that are indispensable to a planner. His recommendations should be based on your tax bracket and other factors, including how much you're paying in Social Security taxes, and whether you're contributing to an IRA. If your adviser neglected to ask for your tax documents, there's a good chance he's in it purely for the money.
Did your planner perform a financial diagnostic? "Your initial meeting with a planner is a lot like going to the doctor," Davis says. "They need to find out information about your life and circumstances to make an accurate diagnosis." If your planner suggested a particular product before reviewing your bank statements, investment strategy and other financial information, you may be in the hands of a "product pusher."
Is your financial adviser available when you request a meeting? It used to be enough to meet your planner once a year, says Davis, but not anymore. "The market changes too much over a year now," she says. A good financial planner recognizes that you need to be regularly updated about how your money is performing compared with the market. If your planner doesn't make an effort to schedule regular follow-ups, it may be time to start looking elsewhere.
Are investments arranged so you can walk if you want? The longer your money is locked in a particular investment, the higher the commission the adviser generally gets, which is why these arrangements often appeal to "product pushers." If your planner has set things up so that you can divest yourself at will, that's a sound indication that he is confident about the way he's handling your money, Davis says.
You can request more information about your planner's training and record from the Better Business Bureau or the Federal Communications Commission.
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