10-questions - page 3

6. HOW WILL I PAY FOR YOUR SERVICES?
As part of your financial planning agreement, the financial planner should clearly tell you in writing how she will
be paid for the services to be provided.
Planners can be paid in several ways:
• A salary paid by the company for which the planner works. The planner’s employer receives payment
from you or others, either in fees or commissions, in order to pay the planner’s salary.
• Fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income.
• Commissions paid by a third party from the products sold to you to carry out the financial planning
recommendations. Commissions are usually a percentage of the amount you invest in a product.
• A combination of fees and commissions whereby fees are charged for the amount of work done to
develop financial planning recommendations and commissions are received from any products sold. In
addition, some planners may offset some portion of the fees you pay if they receive commissions for
carrying out their recommendations.
7. HOW MUCH DO YOU TYPICALLY CHARGE?
While the amount you pay the planner will depend on your particular needs, the financial planner should be
able to provide you with an estimate of possible costs based on the work to be performed. Such costs should
include the planner’s hourly rates or flat fees or the percentage he would receive as commission on products
you may purchase as part of the financial planning recommendations.
8. COULD ANYONE BESIDES ME BENEFIT FROM YOUR RECOMMENDATIONS?
Some business relationships or partnerships that a planner has could affect her professional judgment while
working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with
a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies,
securities or mutual funds have a business relationship with the companies that provide these financial
products. The planner may also have relationships or partnerships that should be disclosed to you, such
as business she receives for referring you to an insurance agent, accountant or attorney for implementation
of planning suggestions.
9. HAVE YOU EVER BEEN PUBLICLY DISCIPLINED FOR ANY UNLAWFUL OR
UNETHICAL ACTIONS IN YOUR PROFESSIONAL CAREER?
Several government and professional regulatory organizations, such as the National Association of Securities
Dealers (NASD), your state insurance and securities departments, and CFP Board keep records on the
disciplinary history of financial planners and advisers. Ask what organizations the planner is regulated by and
contact these groups to conduct a background check. (See listing at right.) All financial planners who have
registered as investment advisers with the Securities and Exchange Commission or state securities agencies, or
who are associated with a company that is registered as an investment adviser, must be able to provide you with
a disclosure form called Form ADV Part II or the state equivalent of that form.
10. CAN I HAVE IT IN WRITING?
Ask the planner to provide you with a written agreement that details the services that will be provided.
Keep this document in your files for future reference.
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