Credit Cave

C - Credentials

First be warned that this is a very very difficult area to review. Credentials mean very little for financial planners as anyone can call themselves a financial planner.

To get past this, we must ask and investigate a candidates years of financial expertise. We need to learn if they hold any university or college degrees. Then we should determine if they have any certifications and investigate what those certifications are.

Warning! It is not difficult to print off a fancy certificate with stock paper from OfficeMax, frame it and hang it on a wall, and the same goes for degrees, so check in on the university if you have never heard of it before.

Consider that a CFP is one of the best amongst Certified Financial Planners, the training, testing and education to obtain a CFP is more rigorous than obtaining a CPA for Accountants.
Finally, if they indicate that they have a designation of RIA or IAR, here is what you will need to know.

• An IAR is an investment adviser representative and they are Independent Contractors. They may be employed by RIA’s. (Kind of like a Real Estate Broker working for a Real Estate Agent.)
• An RIA is a registered investment adviser and they own their own firms.

Either way ask them how many clients they have. A high number of clients is an indication of a successful planner or adviser.

Conclusion

That wraps our quick review of Choosing a Financial Planner.  We have looked at what to consider in regards to the candidates Ethics, their Money Incentives and now we have concluded with their Credentials.

After we have reviewed our potential Financial Advisers Ethics(See the Opening Article Titled When it Comes to Financial Advisers Follow EMC Squared), we must now consider the financial motivations that motivate our financial planner.

M - Money
Once you have the full disclosure then you need to follow the money. You need to understand your financial planners monetary motivations.

1. How do they make money from helping you?
2. Do they earn an investment commission from investment companies, banks, insurance companies or some other group? If they push your money into an account. The last thing you want is a financial planner that might benefit from churning through your investments continually finding a slightly better investment, but charging your actual earnings away in commissions and trading fees.
3. Do they earn money per transaction? - This could lead to a planner that may churn your investments in and out of securities, receiving a transaction, but not helping you earn more money.

Look for Fee based advisers or planners and insure that you have the specific services you will receive detailed in writing to include:

• How many times per year will you meet?
• Who will meet with you (The adviser, a junior representative, a secretary, a call center rep, no one)?
• Will you meet face to face?

There are three areas to consider when choosing a Financial Planner. A financial planner will get access to your life and certain details that you probably will never give to anyone else other than your spouse, not even the tax collector or revenue agent. So it makes much more sense to choose a financial planner very carefully.

There are three areas that do not require an Einstein to cover. So think EMC, and covers the aspects of Ethics, Money and Credentials.

Today we will cover Ethics

E - Ethics

1. If the financial planner is in the states ask for and check their CRD Number (Central Registry depository Number), then look them up on NASD.org.
2. Look for client complaints and potential resolutions if any to those complaints.
3. Check with state securities commisioners or with insurance commissioners.
4. Due a criminal records search because criminals can get a securities license.
5. Request a full written and signed disclosure that identifies all of their compensation and potential conflicts of interest.
• Consider these closely as they may be worth knowing but not necessarily a disqualifier.

That covers the Ethics aspect of choosing a Financial Planner. It is probably one of the most import portions as you will need to trust this person. Next time we will follow the Money, which corresponds to giving us a gauge for how much we can trust the person based on the alignment of their goals with or against our own.

In this modern age, we are all busy people. We run around at a hectic pace and few people find spare time. Computers and the internet are making it possible for all of us to accomplish more, but at the same time, we have to take on more work to keep up with everyone else.

This makes is all the more important for each of us to value our time and make wise decisions about our time allocation.

In business we look at decisions from the perspective of will it make a profit or not first. Then we evaluate whether or not a chosen action will cost us the opportunity of pursuing a different action that may be more lucrative or worthwhile. We also look at marginal opportunities. Maybe we can create 50 widgets in an 8 hour day, but how many widgets can we make if we put in an extra 30 minutes? an hour? or 5 hours? This would be considered the marginal cost of doing more.

In our personal lives we can apply the same principles. We should evaluate whether something is profitable or not for us to proceed. We should insure that we are doing the most financially profitable opportunity over less profitable ones, and we can always look at the benefit of doing a little extra work.

Now, I’m not saying that we should give up the non-monetary things in life or that everyone should work 40, 50, or 80 hour weeks. However, we should have a good understanding of what our time is worth from each of these perspectives as we attempt to make the optimal decision about what we are going to do next.

Too often, especially at work we get caught up in business and getting the job done for our employer. We need to take a step back and make sure that we are getting the job done for ourselves as well. So as we head into the weekend, when hopefully your job and career are less amplified, take some stock of your self and your situation and consider what opportunities are presenting themselves to you and which ones will reward you the most effectively. Also, do not neglect to look for those marginal opportunities. Sometimes these opportunities can turn into new jobs, promotions, a new business and more. If we keep tunnel vision working that prevents us from seeing the world around us, we may miss something that could make all the difference in the world!

If you are a Mac-enthusiast like myself you’ll probably have no nails by now because MacWorld is just round the corner.  This time next week we’ll have trawled through all the new releases and spent far too much time posting on forums about how much we want the new gadgets.

Think Secret has uncovered pictures of the new spreadsheet application from Apple to be called Numbers or Charts, a bit of a moving target.  It’ll come as part of the iLife 07 suite of productivity apps, the working counterpart of Apple’s award-winning iLife suite.

I’m looking forward to this release a lot, finally I’ll be able to manage my finances without the need to fire up Excel.  Apparently the application will be able to import and export Excel formatted spreadsheets with ease, which also comes in handy if you want to use online services such as Google’s excellent AJAXified Spreadsheet.

Keep your eyes peeled, it’ll be an interesting few days for you as a Mac user and for your bank account! ;-0  Anyway, here’s a picture for you to enjoy courtesy of Think Secret.