on Nov 29th, 2009What do financial adviser do?
Many people come into my office telling me one fact and one fact only about their lives: how much they have to invest. This tells me nothing about them—except how much I could make, if I wanted to, from investing their money—and nothing about their financial situation. If someone says she has $10,000 to invest, but also has credit card debt of $8,000 at 18 percent, it may be that her best investment of all would be to pay off that debt first thing. If someone is going to be looking after and investing your money, that person should know everything in your financial picture, including how you feel about risks and what your goals are—the questionnaire I send my clients (page 231) will give you an idea of what a concerned and competent adviser will always want to know.
If you’ve joined the AAII (or can access it from your computer), you will see that there are many different titles and certifications of advisers or planners, some far more qualified than others. Some will just provide you with a financial plan and send you home to carry it out; some will be on your payroll for as long as you want, taking care of your money. You won’t want, for example, the adviser you hire to be licensed only to sell you securities. You want to know that your adviser cares enough about managing money to have gone to extra lengths to become a certified financial planner (this is what I am). A certified financial planner has had to pass a series of exams that deal with every aspect of finance, including risk management or insurance, retirement planning, taxes, and estate planning. It usually takes two years to study for and pass these exams, and those who do pass are required to stay up-to-date by taking continuing education courses and to abide by the standards of the International Board of Certified Financial Planners (IBCFP).