| Hi all, How to pick a financial planner? Choose one who is well trained. In Canada, until recently, financial planners were not regulated - the argument being that most such were sales people of either mutual funds or insurance, both of which were regulated. Sellers of mutual funds have had to pass a fairly simple exam to become qualified. The Canadian Securities Course, (which I took 21 years ago) - the one that stockbrokers take - is much tougher. Recently much more demanding restrictions have been implemented, including governing financial planners, as well. Some in the industry worked toward becomng a Certified Financial Planner, a six-segment course that's tough. I took all six, passed only 5. To achieve it now, I'd have to start from scratch, as the course has been fully revamped. At age 74 - I don't think so. Ask detailed and precise questions about how much training your candidate has taken, that was required - and what additional non-mandatory training. That is, does the person want to improve his/her skills - or is s/he willing to coast along at minimums? You want someone who sets high standards for him/herself, I think. How much financial experience does the person that you're considering have? For example, the first Templeton mutual fund, started in 1954, has a chart showing that if one had invested $10,000. then, it would have been worth $1 million in '84, when I sold mutual funds - about $5 million, recently. When I ask some of the smart-ass young financial planners if they know how much $10,000. was worth in '54, they're not too sure - "quite a bit" they may say. "You could get a good house for $10,000. in '54," is my reply. They are usually very surprised, often almost shocked. Hard to believe. Then - some say that if I'd put $10,000. into a house in '54, it wouldn't be worth 5 million now. I tell them to wait a minute - if I'd bought the home, I'd have lived in it for nigh on fifty years. If I'd put the $10,000. into the Templeton flagship fund - and withdrawn the amount of my rent for almost fifty years - it wouldn't be worth 5 mill now, either. If we discuss apples, let's stick to apples, not change the concentration to oranges. Further - in '54, if I'd had $1,000. - 1,500., I could have bought a $10,000. home. If I'd had only $1,500. cash to invest, the bank would have lent me - only $1,500. So I could have had only $3,000. invested. Unless I had some extra funds available to pay the bank in case the market went down, to keep their commitment to half of the smaller value - they'd have sold some of my asset. So - I'd have been unwise to have chosen to have invested the full amount apparently available. To be fair - over the years, as the total value increased, I could have chosen to have borrowed much larger amounts without too heavy risk - if I chose. But - how many people, as they get their house mortgage paid down, go and increase its amount, again? Which might be a viable option, if they used the money to invest, i.e. to increase their capital, rather than to pay bills, or spend on consumer stuff. To be fair - most aren't being deceptive. They just lack the experience. You need someone with broad experience of life in general, as well, I think. You need to pick someone who's compatible, not only in terms of financial ideas, but you need to feel comfortable with one another on a personal level, as well. You'll be dealing with very personal issues related to your life - and over a number of years. If the person sells financial goods, you want them able to sell a wide variety of products - for they'll only want to sell you the (maybe limited) selection of goods that they offer. Know precisely and completely how your financial planner is to be compensated - entirely commission on the products sold, and, if so, are there trailer fees that the product manager pays to the planner annually, later. Or, (likely lower) commission plus fees, as some do. Best to deal with a fee-only planner, (says I - that's what I've chosen to be for over fifteen years) who doesn't have a conflict of interest. Isn't trying to get you to invest in one product rather than another, whether because s/he can't sell that product, or, among the ones that s/he can sell, one pays a much higher commissin than the other. Doesn't care what you buy, how much, or when - as his income doesn't depend on it. You don't want someone who thinks almost as you do - if so, how long will you be willing to pay that person to give you financial advice not much different from what you know? Or someone whose ideas are very different from yours - for you'll feel the chill of frigid air when you hear his/her recommendations, pull your coat around you and ask yourself, "Do I want to trust the management of my precious money to *that flake!!!* I think that you should choose someone who prefers to have you work toward learning a lot more about how to manage your own money - someone who enables you to become more knowledgeable, not someone who prefers to have him/her largely make the decisions, to be rubber-stamped by you. That's up to you. As I told a psychiatrist who wondered whether he could retire early, and I painted several scenarios for him, when he asked me just to make a recommendation to him, "No one cares as much about your money as you, Doc, not even I, who don't make money on the products that you buy. If the value of your assets goes down $8,000., I can't come along to offer to pick up $4,000. of the loss". That should be enough for now. Your comments, please? ole joyful
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