Are you looking to make profitable investments in the financial markets? Financial planners can help you with expert, professional advice regarding long-term profitable investment decisions. The best financial planners have the necessary expertise to recommend and choose certain investment projects over others (based on the criteria of profitability and other unique preferences of clients). Financial planners are quite abundant in number in the US, and there also exists different types of financial advisors. Fee-only financial planners are one such type of financial consultants, who provide only specialized fee only financial planning services. Indeed, before you actually start spending money on investments, you should ideally find a financial planner, for proper, expert guidance.
In case you are looking to hire a fee-only financial planner, you need to have sufficient knowledge about them before actually acquiring the services of one such financial planner. Some of the basic information that potential investment clients need to have access to include:
a) Who is a fee-only financial planner?
Investors need to be aware about the particular class of financial advisors who are called 'fee-only financial planners'. A fee-only financial planner has the following characteristics:
i) Compensation - A fee-only financial advisor receives his compensation (or, payments, or service charges) from his/her client(s) only. The basis of such payment can differ, from being a fixed annual charge to service charges on an hourly basis. Fee-only financial planning services can also be charged as a percentage of total assets that are managed by the planners.
ii) Commissions - Fee-only financial planners do not receive any additional service charges or commissions apart from those received directly from the clients.
b) Functions of a fee-only financial planner:
The primary duty of a fee-only financial planner is to design, and then effectively implement, investment strategies that would fulfill the investing goals of his/her clients. The investment plans should be simplistic in theory, easy to understand by the investors and should be adaptable to practical applications. Investment plans laid out by fee-only financial planners should also have a long-term perspective. These finance plans should be profitable, considering all dividend and other finance policies, over the broader time-horizon. Fee-only financial planning exercise should also take care of the changing market conditions in the financial environment. Hence, the strategies they devise should be flexible enough in order to counter any potential change in the finance market conditions.
c) Qualifications of a fee-only financial planner:
As per the regulations of the National Association of Personal Financial Advisors (NAPFA), a fee-only financial planner must have the following qualifications:
i) (S)he must hold a bachelor's degree (or its equivalent).
ii) (S)he must always accept direct compensation from the clients only, and has documents to prove that payments from any other sources is not accepted by him/her.
iii) (S)he should have a proper, high-level education in financial planning.
iv) (S)he should follow all Registered Investment Advisor laws, both at the federal and state levels, and the NAPFA fiduciary oath.
v) (S)he should be having a minimum of three years experience in providing professional financial advice.
vi) A colleague or peer must have reviewed a sample comprehensive financial plan, submitted by a fee-only financial planner.
