As I mentioned in a previous article, it's a wise idea to start talking about financial plans with friends and family. And, if you managed to talk with someone you admire about how they handle their finances, then you've done all you can to find a path to hiring a financial planner. Their suggestions, along with some tips I provide below, will go a long way toward finding someone who you can work with for a long time.

Remember that you need to have a reason why you're hiring a financial advisor or planner. If you have a simple project in mind, such as rolling over an IRA or looking for some advice on how to diversify a portfolio, you're on the right track. Sometimes the simple goals can provide the means to discover a person who proves to be your dream advisor. No matter if your reasons are simple or complex, you'll need to interview a few financial professionals before you settle on one to help you.

The first thing you'll want to do is to call three or four advisors and set up an appointment for a consultation. Most advisors will meet with you at no charge for the first appointment, as they – as well as you – want to use this time to understand what you need. Although you'll interview the advisor, they also will ask questions about your needs.

What you don't want to do at this first meeting is to take a folder of personal financial information to this visit, plunk it down, and dive right into your situation. Instead, you'll want to spend this time to ask questions, get answers, and provide the advisor with some outline of what you plan to accomplish. And, you'll need to tell this person that you plan to talk to a few other advisors before you settle on a relationship.

That advisor may or may not be receptive to your plan to interview other advisors, but – frankly – that's his or her problem, not yours. In fact, their reactions to your plan may tell you much about each person. The advisor who feels confident about his or her abilities will be open to your plans.

The National Association of Personal Financial Advisors (NAPFA) has compiled a set of questions that can be accessed on their website. These questions are ideal to print out, read over, and take them with you to the interview/consultation. In addition, you will want to know the following:

1. Find out about the services that this financial advisor provides. Are the services broad, or does that advisor focus solely on topics such as estate planning, retirement planning or tax planning?
   
   
2. Ask about licenses and qualifications, how long that person has held these designations, and the state or states that person is qualified to practice. Ask, also, if that person belongs to any financial organizations or societies, as this is a sign that the advisor is active in his or her practice and may be more in tune with current changes in financial planning guidelines.
   
   
3. Ask how that person would prepare a financial plan for you. If that advisor plans to gather current financial data, set goals based upon your risk tolerance, analyze and evaluate your current (and, possibly, future) financial status, prepare a written plan with a range of alternatives along with counseling on how to implement this plan, then you're in like Flynn. These methods are all that advisor needs to set you on your financial path.


4. Find out what might happen after your initial plan is in place. In other words, discover if that advisor has access to financial products, if he or she sends out portfolio reports, how that person conducts market research, and if that person will continue to provide advice on non-investment financial issues. Finally, you need to know if this advisor will take possession of or have access to your assets. If so, you'll want to know why.
   
   
5. Find out more about that advisor's current clients. How many clients does that advisor have, and how are their portfolios performing? What is the average portfolio size, and how many clients are similar to you?
   
   
6. Last, but certainly not least, is to learn how that advisor is paid. Does that advisor charge an hourly rate or a flat fee? Does that professional take a percentage of assets or a commission? If so, find the percentage. This last information is very important, as you want to be very careful about paying percentages, especially when your portfolio isn't performing well. Don't be afraid to ask for a written estimate of that advisor's fees.

Remember that, no matter how little money you have, the advisor is there to help you. You are hiring, not the other way around. Although some advisors may not take you on because you don't have significant savings, don't worry about them. You are who you are, and you're no less important than Warren Buffett. If you take your time, interview a handful or more of local advisors, and walk away without making a commitment so you can digest all that you learn, then you can make a wise decision about the person you want to hire.

Don't let the advisors wait more than a week before you make a decision about who you want to hire. You'll want to call the advisor you want to hire to set your first appointment. Find out what you need to take to the appointment and be organized and prepared so that you don't waste that advisor's time and your money.

A final word – although your friends and family may have made some suggestions for you, this doesn't mean you need to hire the person that they hired. In fact, if you find someone new, be sure to share that information – who knows? Perhaps you'll open a door for someone who's secretly dissatisfied with their current financial advisor.

Until Later,