Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series. On Fridays, TaxConnections presents questions often asked of a Financial Planner.
Ask Ed: Financial Planning Questions
Question: How are you compensated-by commissions, fees or both?
Answer: Many advisors charge a percentage of the value of the assets they manage-typically 1.0% to 2.0%. Most advisors are licensed to sell products and earn commissions as well.
It’s critical to identify all sources of advisor compensation and determine which compensation model makes the most sense for you. Be advised that many financial products have commissions that can be difficult to identify. Require the advisor to disclose, in writing, any revenue sharing or commission arrangement they may have.
Question: What are the advisor’s credentials?
Answer: Three professional designations to look for are:
1) Certified Financial Planner (CFP)
2) Chartered Financial Analyst (CFA)
3) Personal Financial Specialist (PFS)
All three require lengthy and rigorous course work as well as comprehensive final exam.
Question: What services does the advisor provide?
Answer: Some advisors only provide financial planning while others focus on investment management and may not offer financial planning services. Wealth managers typically provide comprehensive financial planning as well as investment management.
Asking the right questions can ensure a better fit for your needs.
(How To Select A Financial Advisor – Ed Mahaffy)
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