How to Choose a Money Manager
There are few tasks more daunting in the modern world than managing one's finances. Rather than navigating the often-tumultuous waters of saving, spending and investing themselves, many people choose to hire a professional to help them manage their money. No matter what level of money management help you need, or what amount of money you are working with, it is vital to your financial future that you take the time to find a trustworthy and responsible person who is right for you, according to Scott Kilian, CFP, a San Diego-based independent financial consultant.
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Instructions
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Write down the type of help you are looking for from a money manager, be it investment advice, help with budgeting or tips on how much money you should be saving. According to Kilian, the key to this step is actually writing this information down as it will keep you on point with your objectives when interviewing prospective candidates and it will help you see and understand for yourself what it is that you want to accomplish. "The likelihood that you will achieve your desired result is higher if you write it down," he says.
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Search for planners that hold the "CERTIFIED FINANCIAL PLANNER™" designation. This is important because of the additional ethics and fiduciary responsibility to the clients that are required of a CFP. "Anyone, regardless of experience or educational background, can call themselves a money manager," says Kilian, "but only a CFP is guaranteed to have completed comprehensive training, as well as continuing education requirements." To find a CFP practitioner in your area, start by visiting www.fpanet.org.
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Gather referrals to money managers from friends, family and other people you trust. Ask them not only for recommendations of professionals they have worked with successfully, but make sure you also get from them the names of money managers they may have had less luck with so you know who you should avoid.
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Interview a few different CFP practitioners. This is where you'll pull out the list you made of what you want to accomplish and make sure the person you are interviewing can fulfill these obligations. Make sure you are clear on how they make their money and, if necessary, ask them if they can be flexible in how they fashion their fees. Financial planners, according to Kilian, get paid in a variety of ways, be it on a commission basis (e.g. you buy 100 shares of Stock XYZ and he or she makes a commission from the sale), a fee basis (the financial planner will manage your assets for a percentage of those assets per year), an hourly basis or a flat fee. Be clear what it is you want to accomplish so that you can help the planner design a fee schedule that suits you.
During the interview, Kilian recommends that you make sure you have a rapport with the money manager before hiring him or her. "More than anything else," he says, "you have to be able to work with this person, and all of their knowledge and experience won't mean anything if you don't trust them with your money."
Kilian also notes that one great way to make sure you have found someone who cares about your emotions is through their own line of questioning during the interview process. "Good money managers dig deep to find the root of what is important to you as the client," he says.
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Do a background check with the Financial Industry Regulatory Authority (FINRA) by visiting www.finra.org/brokercheck, where you can pull a report that will show any dings on the money manager's record. According to Kilian, most reputable money managers are registered with FINRA and their records should be accessible on this website.
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Resources
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