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Step 1 In the Financial Planning Process #FinancialPlanning #FinancialAdvisor #CFP

By July 15, 2012October 4th, 2016No Comments

The first step in the financial planning process is establishing your relationship with the planner. At this initial stage of establishing a relationship, your Financial Planner should clearly explain the services she will provide and define her responsibilities to you. The type of firm she works for and any governmental registrations and oversight it may have will dictate her minimum legal responsibilities to you. Obviously, you will want a little more than that. Just how much more you will need to determine with your planner. I would advise you to find someone who works for an independent firm.

In addition to these responsibilities, you need to figure out how she will work specifically for you. You will discuss with her and decide how narrowly or how broadly she will analyze your financial situation. Meaning, do you want to know the answer to a specific question, or set of questions, or do you want a more comprehensive financial plan? Actually, a discussion with a good financial planner should lead to more questions because most financial items are interrelated.

You will also decide on the decision-making process you will employ, and how long the professional relationship will last – will it be a one-shot deal or an ongoing relationship?

She should fully explain how and when she will be paid, and by whom. You might pay her firm an hourly fee, a contractual fee for the engagement, a quarterly or yearly retainer, or something else. If your planner is an employee of a firm and is not an owner, she will likely be paid her salary for the engagement.

Some so-called “planners” use the financial plan as a low cost entrée into selling you something else, like stocks or insurance. So if it’s free, or seems really cheap, avoid it. That is what the large brokerage firms have done to enter into this line of business.

Depending upon your financial situation, where you live, and the fee scale of the planner, expect to pay from close to a thousand dollars to several thousand dollars or more for a fairly comprehensive plan, no matter how the fee is arranged. If you pay hourly fees, expect them to run from about $100 to $300 for most planners, and probably 1/3 to 1/2 of the planner’s hourly fee for their assistants or paraplanners. Of course there is a great degree of disparity in pricing depending upon various factors.

Of course, all of these items should be spelled out in a written contract, consented to and signed before any fees are paid or any work is completed.

Michael Garry Yardley Wealth Management

Author Michael Garry Yardley Wealth Management

Michael Garry is a CERTIFIED FINANCIAL PLANNER™ practitioner and a NAPFA-registered Financial Advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA).

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