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Working with financial professionals

What does it take

"In the multitude of counselors, there is safety." -Proverbs


The task of handling money, making investments, protecting assets from creditor claims and planning for the future can be daunting for many individuals. The sheer range of issues is enormous. What's more, some people simply hate numbers. Others are overwhelmed by the amount of information available or don't have time to process it. Still others don't understand what's necessary for effective money management. There's an army of financial professionals ready to help.

Depending on your level of financial sophistication, wealth and what advice you want, you may need to work with more than one financial professional at a time. If you're looking for a comprehensive financial plan, you may work with a financial planner, stockbroker or accountant. You'll probably work with a planner or stockbroker to implement the investment suggestions and an attorney to follow up on any necessary legal documents. If you're contemplating the purchase of certain investment property, you'll probably work with an accountant and an attorney to put the deal together. Financial professionals can make sure that you don't overlook critical matters, such as changes in the law or new financial products and services that can impact your wealth.

What Financial Professionals Can and Cannot Do for You

Finances are a complex subject, and it's shrewd to get professional help. A financial professional can provide information to make informed decisions about your money. He or she may raise concerns or questions that you may have overlooked. And the professional can help make projections and suggest strategies. Ultimately, however, you must make your own decisions and are responsible for the consequences.

It makes sense to turn to a financial professional when:

? You need information about investments, taxes, insurance products, asset protection or other specialized areas.

? You are confused about the information you already have.

? You need some perspective on your options. This is especially important following major life cycle events, such as the birth of a child or the death of a spouse, when emotions can easily cloud rational action.

You may have a particular financial issue, like evaluating the pros and cons of a new type of investment or protecting your assets when starting up a business. You may require a broader range of assistance, such as devising and implementing a comprehensive financial plan.

You should only engage someone to whom you feel comfortable divulging personal information. You need to have a high level of trust that the advice you receive is both expert and in your best interest.

But don't expect a financial professional to be responsible for your decision-making. Only you know what you want; these are your financial goals. Only you know what type of risk you can handle. Only you will suffer the financial consequences of bad decisions.

Who Is a Financial Professional?

Many people claim to be financial professionals, and some may even have a string of initials following their name to tout their qualifications. You need to understand what those letters mean and find the type of professional who can best address your issues.

No single financial professional can handle all of your money management needs which require different types of expertise. For example, attorneys may draw up trusts or powers of attorney to be used in managing your assets, but they don't provide investment advice. You may turn to an accountant for questions on tax issues but defer to an insurance agent for your life insurance needs. There may be some overlap in the areas of help that professionals can provide. For example, most financial professionals can provide assistance with estate planning considerations.

People without any particular credentials may call themselves financial planners. Certain professionals, such as CPAs and attorneys, hold a state license in order to practice their profession, and stockbrokers must hold securities licenses in each state where they trade for a customer on the national exchanges. Although neither federal nor state law requires "financial planners" to pass any exams or hold any licenses in order to claim expertise in the field, it is possible to find proficient experts with the credentials to prove it.

You can't always rely on designations to ensure competence. A particular string of letters after a name isn't a guarantee of expert assistance. At the same time, financial planners who lack any particular designation may still have expertise to offer. It's up to you to assess the competence of the professionals you consult. Here is a listing of many of the designations you may run into.