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By Jason Stipp and Christine Benz | 08-15-2012 02:30 PM

What to Ask When Looking for a Financial Professional

When searching for a planner, first determine your own needs, then seek answers on specific credentials, fiduciary matters, and compensation.

Jason Stipp: I'm Jason Stipp for Morningstar.

On Morningstar.com, we've long helped investors take the reins of their own portfolios, but we also recognize that for many investors and many situations, an advisor can add tremendous value.

So, if you are looking for an advisor, what kinds of questions might you want to ask? Here to offer some insights is Morningstar's Christine Benz, our director of personal finance.

Christine, thanks for being here.

Christine Benz: Jason, great to be here.

Stipp: Christine, before you actually go out and seek a financial professional, the first questions that you ask are of yourself. What do you need to figure out about your own financial plan before you can even begin the search for an advisor or a planner?

Benz: First step back and think about what type of financial guidance you need. Do you need soup-to-nuts guidance on everything from budgeting to investment planning to estate planning? If so, you need a generalist to help you quarterback all the different relationships that you might have. Or maybe you need someone who can help you specifically with investment selection and portfolio construction. If that's the case, then you want to focus on finding an investment specialist--someone who really knows that area inside and out and doesn't spend as much time on areas that aren't central to creating an investment plan.

Stipp: So these sorts of folks will probably help you with long-term planning like retirement or maybe saving for education or something like that.

Are there other sorts of needs where you might not go for a traditional planner, and you might need another kind of financial professional?

Benz: Well, I think there absolutely are. So there are certain instances where you might want to focus on someone with a different skill set who knows a little bit about financial planning. So, an example I would give is for someone with a lot of stock option issues, where there can often be knotty tax issues related. For someone like that, I would say an accountant is probably their best first step, an accountant who is well-versed in the issues of stock options. And that person can maybe coach you a little bit on the financial planning aspects on the side. But really, centrally, that's a tax-planning issue, and what you need is someone who knows that area inside and out.

Stipp: Can you walk through at a high level, what are some of the first questions you should be asking as you're vetting a potential planner or advisor?

Benz: One of the key things to know, Jason, is that the various titles that advisors might use are next to meaningless. So "financial advisor" is a standalone title; it really doesn't mean a whole heck of a lot, nor does "financial planner."

What you want to look for are specific areas of expertise, and usually you want to look for specific credentials that will signal whether or not that advisor or planner has obtained additional study and credentialing in those areas. So "certified financial planner" stands out as the gold standard for someone who is offering broad financial planning advice for that whole household set of issues.

A "registered investment advisor" would be a person that you would want to seek if you are looking for someone who can provide you with focused portfolio guidance on investment selection and portfolio construction. So those are a couple of the key credentials that I would look for.

Stipp: Is there anything in the financial planning or financial advisor space like a Better Business Bureau, where you can vet to see if there have been complaints or any infractions or anything like that?

Benz: Yes, there are a couple of different places you can go. The CFP Planner Board of Standards can help you see if someone who is saying they have a CFP has actually earned the right to use that designation.

FINRA also has the tool called BrokerCheck, so if you are working with someone who is a broker, you can check up on whether they have any regulatory infractions that have been lodged against them. And you can also see whether or not those issues were cleared up. So the BrokerCheck will show you, have there been complaints lodged against this person and also what was the result of those complaints--because it may have been something that was sort of unfounded. It's on the broker's records, so you want to see what happened. It's not necessarily a black mark simply because there was some sort of a complaint lodged.

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