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Financial Planner: Signing On for the Long Haul

You’ve decided on your financial planner and are looking forward to a long and fruitful relationship. But exactly how is that relationship supposed to go?

To a great extent, the rules of the game are hopefully set at the moment you agree to work together. Obviously, the issue of compensation and how you’ll work together are closely linked. Fees, commissions and other compensation structures differ from planner to planner, so you should check out in detail what kind of working relationship you’ll be getting for your money.

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How Often Should You Meet With Your Financial Planner?

Most planners support long-term investments and financial strategy that doesn’t involve a lot of sudden moves. Therefore, it makes sense that you shouldn’t have to meet with your planner any more than what makes sense for you. Some people might require a sit-down meeting every year or two years; others may require more frequent meetings based on their needs. What happens if you suffer a major life change? You should follow the communication procedure you set at the time you sign on with the planner.

The bottom line: no two planners handle communication the same way. Ultimately, it is up to you and your planner to decide how you will deal with each other based on a variety of scenarios, and those should be discussed before you sign on.

Again, be extremely clear with the planner what you want your communication structure to be and what that will cost. Remember, you are paying for time, expertise, and what will be necessary for you to understand what you’re doing.

The First Meeting – What Should You Bring?

The simple answer is ask the planner first. If you are someone who keeps financial records in a shoe-box, it might be okay to bring the shoe-box to your first meeting. If you are a computer person who has your financial information online, the planner might welcome a compatible disk with that information and paper documents for your major accounts and investments, representing what you own and owe.

As far as what you’ll talk about, the planner is not only trying to figure out what shape you’re in, they’re trying to find out where you want to be by the time you retire. They’re going to do this even if you have no clue where you want to be-that’s part of their job. They may ask a lot of non-financial questions to help you get there, and they should get you thinking about all the factors that enter into your money picture-your career, your family, even the hobbies and activities you like to do. At its best, financial planning is a process that helps you find clues to why you do both good and bad things with your money. Sometimes that means analyzing your life in a way where you change behaviors you never expected to change.

Integrating Your Financial Team

Depending on your career and financial circumstance-such as whether you’re a business owner or an individual working for a traditional employer-you may have other experts in your life who have a perspective on your finances. Lawyers, accountants, and business consultants are among them. Your financial planner should ask whether these experts exist in your life, what they do, and what you pay them to do what they do. In a perfect world, your planner, your estate attorney, and your accountant should know the others exist as well as contact information in case there’s a burn­ing question or emergency.

Again, your needs will determine the level of connection these experts should have. For example, if a client is dealing with a serious illness, there might be a physician or a geriatric care manager drawn into the mix. A planner should be able to advise and coordinate interaction between these key players.

How Do You Settle Disputes With A Planner?

Again, you hope a new relationship won’t turn into trouble, but the time to discuss what may happen in a dispute should come at the beginning of a relationship, not when things go wrong. Many financial fields that have direct contact with individuals have moved toward arbitration and mediation to settle disputes. You need to ask a planner whether they have been through this process before, and for that matter, whether they have ever had to settle disputes in court. You may find out some information you hadn’t counted on, and that’s important to know at the beginning.

Signs That Your Relationship With Your Planner Might Be Going Sour

Clients and most financial professionals tend to disagree most often on transaction issues, so if you have a relationship with a planner who handles investment transactions for you, it’s very important to discuss the terms and situations under which those decisions will be made.

Overall, here are trouble signs you might look for:

a. You find your account records show unusually high trading activity that your planner cannot explain to your satisfaction.
b. No matter what the issue, you have trouble getting in touch with your planner.
c. You start finding fees on service statements and other documents that you don’t understand and can’t get adequate explanation for.
d. Your statements are chronically late.
e. You start hearing about all sorts of new investing opportunities in a tough market-and they’re not bargains.
f. You feel your entire planning philosophy has shifted without any discussion or rational explanation.
g. You’re not getting positive financial results from your relationship…period.

Breaking Up – The Amicable Way

It might not be a bad idea to find a new financial planner before you make this transition so they can look over your plan and make appropriate suggestions. You’ll also need to check the portability requirements on the investments you might have bought through the planner and any other possible restrictions on moving accounts.

The best time to discuss the process for ending a client/planner relationship is before both sides agree to work together. Both the planner and the prospective client should approach “what if” in a friendly way. Consider this a version of a prenuptial agreement. Talking about what could be a deal-breaker on both sides of the relationship can be eye-opening and can accomplish one of two things-a more efficient, honest way of working together, or an indication that you shouldn’t be working together at all.

Some questions you should discuss:

a. If you will be recommending investments and I’m not satisfied with their performance, what then?
b. How often do you think we should talk?
c. If we don’t meet in person, what kind of communication is best-phone, e-mail, regular mail?
d. How often should we meet?
e. What kind of written communication should we have?
f. If we decide not to work together anymore, how will I regain control of my investments and will there be any fees or delays in doing so?
g. It’s important. to realize that there is not one standard right answer to any of these questions due to the issues you will bring to your planner and the ways he or she will approach them. The bottom line is to address every aspect of the relationship, including its end.

Financial Planner: Signing On for the Long Haul by
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