Questioning should not stop after hiring adviser
| • | Trimming spending to build retirement nest egg |
By David Butts
Advertiser Staff Writer
Asking questions is the key to starting and maintaining a good relationship with a financial professional.
Whether you are looking for financial help for the first time or have been using financial planners for years, you need to know where your money is going, what are the risks, what are the alternatives and how much you are paying your adviser.
"The biggest mistake is being afraid to ask questions," said Ryan Ushijima, the state commissioner of securities. "Don't be intimidated by the professional designations or the complexity of what you are discussing. Ask questions. It is your money."
Not everyone needs a financial professional.
"Good reasons to hire a financial planner can be the same reasons for hiring someone to clean your home or do your taxes," says Eric Tyson in his book "Personal Finance for Dummies." "If you're too busy or don't enjoy doing it, that's a fine reason to hire help."
You still have the job of selecting a financial planner, and after picking one, you need to stay on top of what they are doing with your money.
"Bottom line, this is your money," said Roberta Lee-Driscoll, a Certified Financial Planner practitioner in Honolulu who sits on the national CFP Board of Professional Review. "...The client should know exactly what is going on with their money. If you don't understand what's going on, you have to ask."
The questioning begins with the search for a financial professional.
• Ask your family, friends or co-workers for the names of financial professionals that have served them well.
• Check the background of the professionals you may hire. The Hawai'i Securities Compliance Board at 586-2722 can tell you if they are licensed to do business in the state and whether they have any disciplinary record. The Certified Financial Planner board, at (888) 237-6275, can tell you if a certain person is authorized to use the CFP certification mark or has ever been disciplined by the CFP board.
• Interview more than one professional. Take advantage of free introductory consultations to find somebody you are compatible with. You are also going to have to disclose a lot about yourself, so you want someone you are comfortable with. If the financial planner talks at you without first listening to your situation, be wary.
• Ask about compensation and keep asking until you understand it. The main choice is between those who earn commission and those who work for fees. Commission means you don't have to pay per hour for advice, but you'll pay a commission on what you buy.
Once you've selected a financial planner the questioning doesn't stop.
"Remain vigilant," says Ushijima. "Keep an eye on things."
