Q-and-A: Researching Financial Institutions and Advisers

In case of a bank failure, the FDIC usually provides you access to your funds within a period of 24 hours, so it’s a seamless transition for you. Just be sure that your bank is an FDIC member or your credit union is an NCUA member and that you don’t keep more than the prescribed limits in any one financial institution.

Also keep in mind that the maximum insurance-coverage limits are scheduled to decline as of the end of 2009, so you’ll want to avoid taking out CDs that mature after 2009 and that exceed the insurance-coverage limits. 

How do I find a financial manager who is trustworthy? What Web sites are available to verify financial managers’ credentials, financial management history, etc.?  – Margaret, Texas

While financial planning sounds like a service everyone could use, you’re advised to first ask yourself what you want to accomplish. Many people think that planners can turn their finances around. But financial planners aren't miracle workers.

Second, many financial planners are simply not capable of dealing with the multiplicity of matters that affect a person's financial well-being, including insurance, investments, credit management, retirement, and estate planning. That's because a lot of people who call themselves financial planners are primarily salespeople. They may understand investments or insurance, but they don't know a great deal about other important financial-planning areas.

If you feel you need a financial planner (perhaps for a particular problem rather than for a comprehensive review), you have many to choose from. All sorts of people call themselves financial planners. In fact, anyone can call himself or herself a financial planner.

Here’s what you should consider when choosing a financial planner:

Typically, financial planners charge hourly or flat rates for services (“fee-only”) or earn commissions. In the latter arrangement, a commission is paid if your planner sells an insurance or investment product.

Of course, a planner who is paid commission may have a conflict of interest in selling insurance or investments. One reason so many people are sold annuities they really don't need is that planners generally earn high commissions from selling annuities.

What makes a financial planner right for you? That depends on your needs.

If you want to be assured of getting objective advice, use a fee-only planner (a planner who charges a fee, usually based on an hourly rate), but be prepared to pay for the service. If you don't want to pay what may amount to a large fee, consider a commission-only planner, but be sure to select one who would put your interests first.

Financial-Planning Credentials
There is an alphabet soup of financial-planning designations. Some come with stringent requirements and require certified professionals to take continuing education thereafter.

In addition, the Financial Industry Regulatory Authority (FINRA) has a helpful Web site. It contains information on selecting a financial or investment adviser and a summary of almost 100 different financial-planner designations—most of which are of dubious value.

If you are interested in finding an investment adviser rather than a financial planner, the above Web site also lists Internet sites where you can check an investment advisor’s registration and disciplinary history.

Whomever you choose, be sure he or she is truly qualified to be a financial planner. Accreditation is certainly a plus, but it doesn't guarantee competency.

The way to find a good financial planner is no different from the way to find a qualified lawyer, insurance agent, or tax preparer: word of mouth. Seek referrals from acquaintances or coworkers whose financial and family circumstances are similar to yours.

Many financial planners run seminars to drum-up business, but don't be swayed by a slick presentation or a “free” lunch.

I’ll now say more bluntly what I said first: Do you really need a financial planner?

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