Find the Right Financial Planner

There are seven vital questions to ask a financial planner and one big question for you

How do you find a financial planner that is just right for you? There is little doubt that most people can benefit from good advice. These eight questions act as a great checklist to help you find the right adviser.

The seven questions are:

1. What are your qualifications and experience?

All planners need to be suitably qualified to provide personal advice. They should readily provide their qualifications upon request.

Currently there aren’t many qualifications required to be registered as an authorised financial planner. Therefore, to get a real sense to their standard of education you can also ask:

  • Do you have a finance degree?
  • What did you study last at college/university?
  • What training and studies do you currently undertake?

Qualifications are one thing, but you also want to know about their experience. Key questions include:

Describe your typical client?

  • How long have you been working as planner?
  • What have you learned most since becoming a financial planner?
  • If a summary of your skills, values and financial planning beliefs were to appear in tomorrow’s business pages, what would be written?

These questions are simple conversation starters. However, they play a pivotal role in establishing a real sense of who they are and what they do as a financial planner.

2. What is the structure of the company employing the financial planner?

Most planners work for small companies that are operated by the senior financial planner. You’ll want to know if the financial planning company is capable of managing your affairs both for now and in the long term. Key questions to ask:

  • How long has the company been in operation?
  • Does it have any outstanding issues such as unresolved client complaints?
  • How long has the core staff been at the company?
  • What will happen when the current company owner(s) exit the business e.g. at retirement?
  • Is the business linked to a major institution and if so, does this create any conflicts?

Investing for the long term may well be investing beyond the working life of the financial planner. You need to be confident that you will be taken care of when things inevitably change. If the company is linked to a major institution, you need to consider if this will create bias in the advice from the financial planner. However, for many investors being linked to a major institution does provide some level of security.

3. What are the benefits for the financial planner by working at this company?

Simply ask – What are the benefits for you working at this company?

They should be able to articulate their answer quite easily. In their answer, you are looking for benefits that find their way back to you as the client. For example, if they say ‘The company provides great facilities and support that allows me the freedom to focus on the client’, that is a good start.

If they are struggling and just rambling on, this would obviously not be a good sign! Worse still, if they say ‘That the company pays the best bonuses in town’, it’s time to move on to the next financial planner.

4. What are the disadvantages for working at this company?

Simply ask: What are the disadvantages of working at this company?

Now this is a tough one, everyone finds it easy to talk about the good but we all know there must be some bad! You are looking for honesty in their answer. If they are honest they will highlight a couple of things such as a restricted range of investments, lack of on-line presence etc.

If they say ‘The business is too strict on its auditing and compliance’, this should start ringing the warning bells. A good financial planner should not be afraid of good compliance procedures and ultimately good compliance is there to protect you as the client.

5. What client experience will be delivered?

Now we’re getting to the nitty gritty. This is why you are sitting in front of this financial planner. You want to know the WIIFM factor (What’s In It For Me). After all you are the one paying the fees and you want a return for your investment in this financial planner.

Just ask: What is the client experience delivered by you and the company?

If the financial planner replies ‘It is all about the exceptional investment returns that I get for my clients’, it could be a good time to leave the office. A financial planner selling future returns is normally selling false hope for all concerned.

You want the planner to highlight that the experience delivered is ‘all about caring for you as their client’. They will be there to help, assist, facilitate, guide and carefully invest your investment funds. You also want them to act like a good general practitioner (the local doctor), by engaging specialists to assist with all aspects of your finances.

A financial adviser that really cares for you will be more cautious and understanding of your situation. They will take responsibility for their actions and work in your best interests.

6. What fees will be charged for the services provided?

You need to know the fees no matter how much they may care for you.

Ask: Can you give me a schedule of fees for the services that you will provide?

The financial planner should also be able to provide the scope of their advice (what they are/are not advising on).

It is important to understand that fees tied to your investment account can eat into your investment returns and of course, you won’t get quality advice and service for free either. Your goal is to fully understand the fees and what you get in return for these fees. This way you can compare financial planners and make an informed decision as to which one is suitable for you.

7. What if something goes wrong?

You need to ask: If something goes wrong and I need to complain, how do I do that?

  • What have been the company’s experience for complaints over the past couple of years?
  • Have there been any long running complaints and if so why?

You should be getting a flavour of what really happened with the client complaints. If they stumble on their response, treat it as a warning.

1. The big question for you – Can I work with this financial planner?

The emphasis of this question for you, is to determine if the financial planner is the right fit for you and, are you the right fit for them. You should see your relationship as a two way arrangement. You will need to be very open and honest with the financial planner to enable he/she to deliver the best advice and service.

They don’t need to be your best friend. An error many people make when seeking a financial planner is to select the ‘friendliest’ person that they meet, without judging their ability to deliver the right service.

While you don’t have to like the person, you do need to be able to trust them. Like all good relationships in life, trust will be critical for the relationship to be a success.

If you follow the questions, take notes and consider a number of financial planners, you will be in a much better position to choose one with confidence.

Personal Finance Advice

The airwaves are filled with personal finance advice, advocating countless products, investments and disciplines for creating wealth and financial largesse in your life. With all the advice available regarding your finances it is easy to get lost and lose focus on the simple principles that if applied, have been tested to create wealth in your life.

Any sound personal finance advice plan should begin with the most important rule of money, and the one we often find so hard to find the discipline to keep. To create excess money in your life, one must first learn to spend less money than earned from month to month. This is an inviolable rule of personal finance, and I recommend you breaking it at your financial peril. Your credit, bank statements and retirement income will reflect directly how well you hold to this principle, so my advice is to without fail spend less money than you make.

Personal finance advice is filled with such maxims, but how do we follow this advice. If you do not already find yourself spending less money than you make, work towards this goal. Cut expenses and bills where you can, and seriously evaluate what spending habits you have that are need vs. want items. With a cold assessment of one’s finances, there never fails to be a series of costs that can be cut in the name of achieving this goal. Take my advice, do whatever it takes to spend less money than you make.

Successful money management has its rewards too, and is not all about just cutting the pleasures of life that can be purchased with ready capital and financial success. In following with this precept, the next piece of personal finance advice is to increase how much money you bring in from month to month. It sounds like basic financial advice, yet how many do you know in your own life that do not actively put focus and energy into increasing their monthly income.

These two essential pieces of personal finance advice should be applied at all times to your life. Always maintain a focus on finding ways to keep your spending below what you make, and a dedication to pursuing methods of adding more value to others in order to increase the money you are capable of bringing in each month.

The difference in savings and increase will surprise you. Do not get lost in the shuffle of personal finance advice, hold to these essential principles and build the common sense money habits that will create wealth in your life today.

Stock Investment Tips

New to stock trading? Want to learn how to invest in the stock market but you do not know where to find the best resources? Here are the most practical things that you can do to find the best stock investment tips.

Find the Best Broker

You need a broker if you want to invest in the stock market. Make sure that your broker provides investing education services. The best stock market broker will teach everything you need to know about the market.

Some of the top brokers today provide beginner training for new clients. These trainings include regular email tutorials, investor tips, online webinars, and daily market updates. Some brokers also provide exclusive access to online newsletters where the works of major market analysts are published. All these resources can provide significant help for you and will enable you to grasp the essentials of the stock market, investing, and stock trading.

Get an Online Crash Course

There are formal online crash courses available for new investors. You can take advantage of these formal courses to get solid stock investment tips and lessons from trading gurus. There are plenty of benefits that you can enjoy from formal courses.

Through these courses you will be able to learn how to read charts, how to analyze different market indicators, and how to pick profitable stocks. Providers of these courses will give you stock trading manuals and other resources. You can keep these educational resources for further studies and could also serve as your guide when you start investing money on the stock market.

Educate Yourself

If you do not want to spend money on formal stock trading courses and trainings, you can also self study to educate yourself. There are lots of stock investing websites that offer free pointers and tips for investors. Just make sure to choose highly reputable sites so you can get accurate information and valid market assessments.

If you will self study, the best educational resources for stock trading usually come from the websites of major financial institutions, investment banks, government portals, and blogs of known market analysts. These sites provide expert and reliable stock investment tips.

Financial Education

Habits die hard. So, if we are going to be slaves of our habits, lets at least have good habits. If we stretch this point, it is easy to see the case for money and financial education for school children. Children are inherently curious about the things happening around them. However, in our day to day life, we take much of what we see for granted. Often times, children ask very interesting questions like “Where does money come from?”, “Why do prices of some goods keep going up while the prices of other goods keep coming down?”, etc. However, many adults are not able to answer these questions in a satisfactory manner. The climax of much of modern education is a job, which is something people have to endure to earn money. However, managing money and growing it, which are life skills are not taught to students at all. The parents don’t teach it, the schools don’t teach and in the end, we bring up yet another generation of clueless adults who fall prey to financial intermediaries. In order to break this vicious cycle, it is really important for parents to ensure that their children get right financial and money education.

Are there examples of financial education at an early age making a difference in anyone’s life? The answer is a resounding “Yes”! In fact, we don’t have to look beyond Mr. Warren Buffet. Buffet started saving and investing very early in his life. We all know that the key to unlock the power of compound interest is to start early. By the time an average adult is aware of all these facts, he is already in his mid thirties. As Malcolm Glad well mentions in his “Outliers”, it takes 10,000 hours of practice to become very good in any endeavor. Thus, it is abundantly clear that children are exposed to the concept of money and compounding at an early age. This will ensure that by the time they reach adulthood, they would have spent a few hundred hours, if not a few thousand hours pondering about making and managing money. The head start will help them lifelong as the early birds get the benefit of the compounding effect of their wealth.

Another advantage of teaching school students about finance is that they become confident of taking their own decisions. This means that they can do away with middle men like financial planners, brokers, insurance agents, etc. This leads to substantial savings in terms of money over a 20 year period. The savings are likely to be approximately 2% – 3% every year. This is not an insignificant amount and the end result is that the retirement nest egg of the adult who had the benefit of early financial education is way larger than that of a person who has to learn the lessons the hard way, if at all.

Real money education is based on a curriculum that is a synthesis of several disciplines – History, business, banking, economics, etc. The key is to integrate these concepts so that the children are confident of taking decisions in the real world. Traditional education stresses more on analysis than synthesis, but in real world most problems are solved by synthesis of ideas from several disciplines rather than through analysis.

To summarise, it is important for the parents and the school teachers to equip the children with money and financial knowledge to survive and prosper in today’s complex world. As financial products grow ever complex, a basic understanding of the fundamentals are the least that is required of any future adult to compete in the highly challenging world of tomorrow. So let us sow the seeds of financial knowledge in the minds of young children, so that they may reap the benefits in their adulthood.

Money Wizards is a money education company offering quality education in Finance. We educate the college students to better mange the money to be a fit in the corporate world.

Financial Adviser

Heroes or villains?

“All industries have a few bad apples. I would say that 80% of financial advisers are either good or very good” or “It’s just 99% of financial advisers who give the rest of us a bad name”

Financial advisers, also called financial consultants, financial planners, retirement planners or wealth advisers, occupy a strange position amongst the ranks of those who would sell to us. With most other sellers, whether they are pushing cars, clothes, condos or condoms, we understand that they’re just doing a job and we accept that the more they sell to us, the more they should earn. But the proposition that financial advisers come with is unique. They claim, or at least intimate, that they can make our money grow by more than if we just shoved it into a long-term, high-interest bank account. If they couldn’t suggest they could find higher returns than a bank account, then there would be no point in us using them. Yet, if they really possessed the mysterious alchemy of getting money to grow, why would they tell us? Why wouldn’t they just keep their secrets to themselves in order to make themselves rich?

The answer, of course, is that most financial advisers are not expert horticulturalists able to grow money nor are they alchemists who can transform our savings into gold. The only way they can earn a crust is by taking a bit of everything we, their clients, save. Sadly for us, most financial advisers are just salespeople whose standard of living depends on how much of our money they can encourage us to put through their not always caring hands. And whatever portion of our money they take for themselves to pay for things like their mortgages, pensions, cars, holidays, golf club fees, restaurant meals and children’s education must inevitably make us poorer.

To make a reasonable living, a financial adviser will probably have costs of about £100,000 to £200,000 ($150,000 to $300,000) a year in salary, office expenses, secretarial support, travel costs, marketing, communications and other bits and pieces. So a financial adviser has to take in between £2,000 ($3,000) and £4,000 ($6,000) a week in fees and commissions, either as an employee or running their own business. I’m guessing that on average financial advisers will have between fifty and eighty clients. Of course, some successful ones will have many more and those who are struggling will have fewer. This means that each client will be losing somewhere between £1,250 ($2,000) and £4,000 ($6,000) a year from their investments and retirement savings either directly in upfront fees or else indirectly in commissions paid to the adviser by financial products suppliers. Advisers would probably claim that their specialist knowledge more than compensates for the amounts they squirrel away for themselves in commissions and fees. But numerous studies around the world, decades of financial products mis-selling scandals and the disappointing returns on many of our investments and pensions savings should serve as an almost deafening warning to any of us tempted to entrust our own and our family’s financial futures to someone trying to make a living by offering us financial advice.

Who gets rich – clients or advisers?

There are six main ways that financial advisers get paid:

1. Pay-Per Trade – The adviser takes a flat fee or a percentage fee every time the client buys, sells or invests. Most stockbrokers use this approach.

2. Fee only – There are a very small number of financial advisers (it varies from around five to ten percent in different countries) who charge an hourly fee for all the time they use advising us and helping to manage our money.

3. Commission-based – The large majority of advisers get paid mainly from commissions by the companies whose products they sell to us.

4. Fee-based – Over the years there has been quite a lot of concern about commission-based advisers pushing clients’ money into savings schemes which pay the biggest commissions and so are wonderful for advisers but may not give the best returns for savers. To overcome clients’ possible mistrust of their motives in making investment recommendations, many advisers now claim to be ‘fee-based’. However, some critics have called this a ‘finessing’ of the reality that they still make most of their money from commissions even if they do charge an often reduced hourly fee for their services.

5. Free! – If your bank finds out that you have money to invest, they will quickly usher you into the office of their in-house financial adviser. Here you will apparently get expert advice about where to put your money completely free of charge. But usually the bank is only offering a limited range of products from just a few financial services companies and the bank’s adviser is a commission-based salesperson. With both the bank and the adviser taking a cut for every product sold to you, that inevitably reduces your savings.

6. Performance-related – There are a few advisers who will accept to work for somewhere between ten and twenty per cent of the annual profits made on their clients’ investments. This is usually only available to wealthier clients with investment portfolios of over a million pounds.

Each of these payment methods has advantages and disadvantages for us.

1. With pay-per-trade we know exactly how much we will pay and we can decide how many or few trades we wish to do. The problem is, of course, that it is in the adviser’s interest that we make as many trades as possible and there may be an almost irresistible temptation for pay-per-trade advisers to encourage us to churn our investments – constantly buying and selling – so they can make money, rather than advising us to leave our money for several years in particular shares, unit trusts or other financial products.

2. Fee-only advisers usually charge about the same as a lawyer or surveyor – in the range of £100 ($150) to £200 ($300)) an hour, though many will have a minimum fee of about £3,000 ($4,500) a year. As with pay-per-trade, the investor should know exactly how much they will be paying. But anyone who has ever dealt with fee-based businesses – lawyers, accountants, surveyors, architects, management consultants, computer repair technicians and even car mechanics – will know that the amount of work supposedly done (and thus the size of the fee) will often inexplicably expand to what the fee-earner thinks can be reasonably extracted from the client almost regardless of the amount of real work actually needed or done.

3. The commission paid to commission-based advisers is generally split into two parts. The ‘upfront commission’ is paid by the financial product manufacturers to the advisers as soon as we invest, then every year after that the adviser will get a ‘trailing commission’. Upfront commissions on stock-market funds can range from three to four per cent, with trailing commissions of up to one per cent. On pension funds, the adviser could get anywhere from twenty to seventy five per cent of our first year’s or two years’ payments in upfront commission. Over the longer term, the trailing commission will fall to about a half a per cent. There are some pension plans which pay less in upfront commission. But for reasons which should need no explanation, these tend to be less popular with too many financial advisers. With commission-based advisers there are several risks for investors. The first is what’s called ‘commission bias’ – that advisers will extol the massive potential returns for us on those products which earn them the most money. So they will tend to encourage us to put our money into things like unit trusts, funds of funds, investment bonds and offshore tax-reduction wrappers – all products which pay generous commissions. They are less likely to mention things like index-tracker unit trusts and exchange traded funds as these pay little or no commissions but may be much better for our financial health. Moreover, by setting different commission levels on different products, it’s effectively the manufacturers who decide which products financial advisers energetically push and which they hold back on. Secondly, the huge difference between upfront and trailing commissions means that it’s massively in the advisers’ interest to keep our money moving into new investments. One very popular trick at the moment is for advisers to contact people who have been saving for many years into a pension fund and suggest we move our money. Pension fund management fees have dropped over the last ten to twenty years, so it’s easy for the adviser to sit a client down, show us the figures and convince us to transfer our pension savings to one of the newer, lower-cost pension products. When doing this, advisers can immediately pocket anywhere from three to over seven per cent of our total pension savings, yet most of us could complete the necessary paperwork ourselves in less than twenty minutes.

4. As many fee-based advisers actually earn most of their money from commissions, like commission-based advisers they can easily fall victim to commission bias when trying to decide which investments to propose to us.

5. Most of us will meet a bank’s apparently ‘free’ in-house adviser if we have a reasonable amount of money in our current account or if we ask about depositing our savings in a longer-term, higher interest account. Typically we’ll be encouraged by the front-desk staff to take a no-cost meeting with a supposed ‘finance and investment specialist’. Their job will be to first point out the excellent and competitively high interest rates offered by the bank, which are in fact rarely either high or competitive. But then they will tell us that we’re likely to get even better returns if we put our money into one of the investment products that they recommend. We will be given a choice of investment options and risk profiles. However, the bank will earn much more from us from the manufacturer’s commission selling us a product which is not guaranteed to return all our capital, than it would if we just chose to put our money in a virtually risk-free deposit account. A £50,000 ($75,000) investment, for example, could give the bank an immediate £1,500 ($2,250) to £2,000 ($3,000) in upfront commission plus at least 1% of your money each year in trailing commission – easy money for little effort.

6. Should you have over one million pounds, euros or dollars to invest, you might find an adviser willing to be paid according to the performance of your investments. One problem is that the adviser will be happy to share the pleasure of your profits in good years, but they’ll be reluctant to join you in the pain of your losses when times are tough. So, most will offer to take a hefty fee when the value of your investments rises and a reduced fee if you lose money. Yet they will generally not ever take a hit however much your investments go down in value. The benefit with performance pay for advisers is that they will be motivated to maximise your returns in order to maximise their earnings. The worry might be that they could take excessive risks, comfortable in the knowledge that even if you make a loss they’ll still get a basic fee.

Am I qualified? I’ve written a book!

One worrying feature with financial advisers is that it doesn’t seem to be terribly difficult to set yourself up as one. Of about 250,000 registered financial advisers in the USA, only about 56,500 have the most commonly-recognised qualification. Some of the others have other diplomas and awards, but the large majority don’t. One source suggested that there may be as many as 165,000 people in Britain calling themselves financial advisers. Of these about 28,000 are registered with the Financial Services Authority as independent financial advisers and will have some qualifications, often a diploma. But only 1,500 are fully qualified to give financial advice. The in-house financial advisers in banks will usually just have been through a few one-day or half-day internal training courses in how to sell the particular products that the bank wants to sell. So they will know a bit about the products recommended by that bank and the main arguments to convince us that putting our money into them is much more sensible than sticking it in a high-interest account. But they will probably not know much about anything else. Or, even if they are knowledgeable, they won’t give us any objective advice as they’ll have strict sales targets to meet to get their bonuses and promotion.

However in the world of financial advisers, not having any real qualifications is not the same as not having any real qualifications. There are quite a few training firms springing up which offer financial advisers two- to three-day training courses which will give attendees an impressive-looking diploma. Or if they can’t be bothered doing the course, advisers can just buy bogus financial-adviser qualifications on the Internet. A few of these on an office wall can do much to reassure a nervous investor that their money will be in safe and experienced hands. Moreover, financial advisers can also pay specialist marketing support companies to provide them with printed versions of learned articles about investing with the financial adviser’s name and photo on them as ostensibly being the author. A further scam, seen in the USA but probably not yet spread to other countries, is for a financial adviser to pay to have themselves featured as the supposed author of a book about investing, which can be given out to potential clients to demonstrate the adviser’s credentials. If we’re impressed by a few certificates on a wall, then we’re likely to be doubly so by apparently published articles and books. In one investigation, journalists found copies of the same book about safe investing for senior citizens ostensibly written by four quite different and unrelated advisers, each of whom would have paid several thousand dollars for the privilege of getting copies of the book they had not written with themselves featured as the author.

Of course, only a very small number of financial advisers would resort to tricks like fake qualifications, false articles and bogus books. But the main point here is that far too many of them may know a lot about a few specific products which they are highly incentivised to sell, but may be insufficiently qualified to offer us genuine financial advice suited to our particular circumstances.

Personal Loan For A Payday Loan

Payday LoansIf you are in need of fast money for something very important, you have probably considered taking out a personal loan. A payday loan would be the best way to get the money you need within a day or two, but there are some things you must be aware of before jumping into that type of loan.

Payday Loan Advantages

There are many advantages to taking out this type of personal loan. For starters, you only need a consistent income to qualify for most payday loans. Most lenders offering loans based on paychecks do not require credit checks. They do not have books of guidelines and hoops that you must jump through in order to qualify for the loan. They simply require you to have a job that delivers a steady paycheck. Whether you are a waitress or a CEO, the same standards apply with this type of lender.

Another advantage is the speed in which the money can be delivered. If you walk into a payday loan establishment in your community and are able to prove that you have a job, you could walk out with the money the same day. If you go with an online personal loan service, you could have your money electronically delivered to your bank account within twenty-four hours. In some cases, it could be even faster.

You also do not have to put up collateral for this type of loan. This means it can work for you even if you do not have a home or vehicle to put on the line.

The final advantage to getting a personal loan is the ability to get future loans if you find yourself in need of fast money in the future. Once you establish a relationship with a payday loan service and they know that you will repay your loan on schedule, they will typically be open to giving you loans whenever it is needed. This gives you an outlet for fast cash whenever the need arises in the future.

Payday Loan Disadvantages

While those advantages are convincing, you have to be just as aware of the potential drawbacks to using a personal loan service that operates on payday loans. The biggest disadvantage is the fees involved. There is no hiding the fact that a payday loan service will charge higher interest rates than you would find with a loan through a bank or credit union.

Yet, since a payday loan service typically does not check credit, they are able to work with people would be considered too high risk for many other lenders. This is why they must work with higher interest rates, especially since no collateral is offered with the loan.

Taking out a personal loan is not bad. Taking out a payday loan is not bad, either. It is taking the wrong loan from the wrong lender that can turn out bad. The good news here is that once you find a good lender willing to extend this type of short term loan, you will never again have to go out searching. When you need fast money and are sure of your ability to repay the loan, you will know exactly where to turn. Following are some simple guidelines on finding the right lender for your loans.

Ask for Recommendations

Part of the allure of a payday loan is that it does not have to become news with all of your friends and family members. Many people go for this type of personal loan because it does not require a credit check, and because most lenders do not report to the credit agencies at all. This is therefore the most secretive type of loan you will ever find.

Yet, you need recommendations because it is a powerful way to find the most trustworthy personal loan lenders. If you do not have others in your personal life that you would trust to ask for a recommendation, you can go online and get the opinions of other consumers who you may not know in real life. Search for message boards that allow consumers to leave feedback on different loan providers. You will get some idea of who others are trusting, and who they are staying away from.

Read Every Page of the Site

Online payday loan providers are clearly the easiest to work with, since they allow you to fill out an application online and receive money directly into your bank account. It is tempting to just go straight to the application and put in for your payday loan, but that is a mistake. Take the time to read every page on the site. Make sure you feel just as comfortable with them after that as you did when you first found them.

Ask Questions

If you are not sure about the terms of your personal loan, or have questions about how a lender operates, you have to ask those questions prior to filling out an application. There should be a phone number where you can talk to a human being who has all the answers for you. If this is not available, then you may not be dealing with a reputable payday loan provider.

Check with the BBB

Check with the Better Business Bureau to see if other consumers have lodged complaints against the lender you want to work with. If there are a lot of complaints or a personal loan provider is not registered with the BBB, then you might want to turn in another direction for your loan.

It is important to note that many businesses get one or two complaints here and there, yet they are not bad businesses. You are just trying to rule out payday loan services who routinely get a high frequency of complaints from other consumers. If you do not see that, then you have probably found a reasonable business with a valuable service.

One final disadvantage to consider is the fact that you must pay the loan back on time, or you face excessive fees that could put you in further financial trouble. As long as you can pay back on time, a personal loan of this type could be your answer to whatever financial problems plague you.