Do One Thing: Find a financial planner (time: a few hours)
Only fancy people go to financial planners, right? Au contraire. Spending some time with a licensed money professional can put you on the right path even when you don't know what you don't know. Here's how to track one down.
This is for you: If you have questions about money-where to put it, how to save it, how to spend it, how to invest it-and you have some extra cash to spend for this advice. The more complicated your financial situation (marriage, kids, house, debt), the more questions you probably have, and the more it's likely worth the price.
Hands-on time: Up to an hour to get organized, and up to an hour per planner interview
Total time: The process may involve an initial meeting before you pick a winner, so it depends on how many planners you interview or visit.
Cost: Finding the planner is free, often even including an initial consultation. Once you find a planner, the typical hourly rate ranges from $180 to $300, and you should count on at least two hours (probably more) for a financial plan. Planners within the Garrett Planning Network offer "Real-Time" sessions during which they meet with clients and focus on giving them the best possible advice over the course of two hours, and those sessions generally run about $500.
What you'll need: An Internet-connected computer, a phone
What to do:
1. Ask friends and family. This is the advice you probably hear most often-asking friends and family for recommendations-but don't leap without looking. Make sure you ask people whose financial circumstances are similar to yours, and don't stop there. Compare planners to make sure you find the right fit for you.
2. Look for a planner who charges by the hour. Advisors set their rates in different ways. Many are on commission, which means they get paid by fund companies to sell you specific investments; others will charge you a percentage of the money you have to invest, which means they'll only see you if you have a minimum amount to invest (usually $250,000 and up). Planners who charge by the hour will see you whether you've got $100 or $100,000. You can start your search with the National Association of Personal Financial Advisors (NAPFA) or GarrettPlanningNetwork.com. (Disclaimer: Network founder Sheryl Garrett is an advisor to Bundle.)
3. Gather a list.Start with a list of about five potential planners you want to research. You can always revise the list later if none of your choices works out.
4. Call them up or shoot them an email. You'll want to know:
- How they charge-by the hour, a percentage of your assets, on commission, a flat fee for certain services, or a hybrid of one or more methods.
- How much they charge (see the typical hourly rate, above, for comparison).
- How much you should expect to pay overall for a financial plan. This is their cue to tell you they need to know more about your situation to give you a good estimate. If that's the case, ask them what they need to know to give you a ballpark figure. If a planner quotes a one-size-fits-all rate, experts recommend you move along to someone who's going to tailor their services to your specific needs. (Translation: You don't want the same financial plan that your mother would get.)
5. Don't know what else to ask? Check out the Garrett Planning Network's questionnaire here. In fact, some experts suggest sending this questionnaire to all of your initial candidates to help narrow down the field.
6. If you like what you're hearing, ask whether the planner offers a free initial consultation. (Most do.)
7. Don't bargain hunt. It's okay to choose someone who charges less, but make sure that person has enough experience to give you valuable advice.
8. Schedule a (free) initial meeting with the planner (or planners) who seem to meet your needs, then pay attention. Does the adviser seem interested in learning more about you or telling you about himself? (Hint: He should be learning about you.) Do you get along? Would you be willing to take this person's advice? Can you relate to him? Some people like having a financial adviser who's close in age to themselves-does that matter to you? Would you be comfortable asking him to explain something, or would you find it intimidating? "I think our gut does tell us quite a bit," says Garrett. "If you have any sense of 'Gosh, I'm not really sure if I like this person,' that's enough. Either have another conversation with them or just keep looking."
9. Found one you like? Congrats! Set a date for some financial planning.
10. Repeat as necessary. If you just need some one-time help getting started, you can do that, but you can also check in with your planner on an annual basis or every couple of years. It's up to you.
To learn more:
Finding and Hiring the Right Advisor, a chapter from Personal Finance Workbook for Dummies, care of the Garrett Planning Network
What is a Fee-Only Financial Planner? (NAPFA)
Who helped: Sheryl Garrett, financial planner and founder of the Garrett Planning Network; Ted Toal, financial planner in Annapolis, MD
Did you do it? Tell us what worked or share other tips in the comments below.
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