Things to know before choosing a financial professional

If you are trying to find a financial professional to help you manage your investments, you may be overwhelmed by all the choices that are out there. However, before you make a decision it is crucial to take the time to do some research and find the person and/or company that is right for you. Here are some things to know before choosing a financial professional-

• Understand that financial planning is more than investing-Not all financial planners offer comprehensive services. There are some that just give investment advice, or focus on one aspect of planning, such as insurance or taxes. You need to be sure that the financial planner that you choose offers a wide range of services to fit your investing needs.
• Anyone can call himself a planner-This is why it is so important to hire a planner who's earned special credentials (such as a Certified Financial Planner or Personal Financial Specialist designation). This is done by meeting training standards or having a certain level of experience. It is critical for investors to be aware of this, since virtually anyone can hang out a sign that they are a financial planner.
• Consider lots of choices-When you are hiring a financial planner, you should interview at least three pros to find the one who can deliver the services you need and who's compatible with your style. This way you can have a wider view of who is available, and what services they can offer you.
• Remember that personal references are a good place to start, but they don't say it all-There is no arguing with the fact that a reference from a friend or family member is a great way to search for a financial planner, however, you need to make sure you've got similar needs as the person who's giving the referral. You can also go to groups like the Certified Financial Planner Board of Standards and the Financial Planning Association for additional references.
• Be sure to check credentials-You should also check to see if a planner's record is tarnished by disciplinary problems, or complaints. Groups that award credentials or state agencies help to keep tabs on planners and can provide help.
• Have a clear understanding of how your planner is getting paid-The three most common set-ups for pay are: Fee-only, fee-based, and commission-based. Fee-only planners don't get commissions for the products they sell, the fees are for the advice they give. Fee-based planners may receive commission on some products they sell, but most of their money comes from a fee you pay them. Commission-based planners are paid by the companies whose products they sell.
• Always get references-You should ask a planner for two or more of his clients. If there is any reluctance on the part of the planner to do this, then this is red flag to move on. After getting the references, then follow up and call to find out how a planner performs in specific circumstances, such as during a financial crisis.
• Don't be afraid to express yourself-Remember that the quality of a planner's advice is directly correlated to how well he or she knows you. You will need to make sure a planner asks questions about your finances, goals, risk tolerance and philosophy. It is important to realize that if they don't ask, they probably aren't paying adequate attention.
• Know yourself-Finally, it is important to understand that the best planner will take his cues from you. Before you hire someone, you will want to identify the financial goals you want to meet, your assets and liabilities, your risk tolerance, and investment style.