Do you have all the answers? Do you do your own semi-annual teeth cleanings too? If you have a substantial amount of money, you should be seeking professional advice.

If you have $265 in a Roth IRA and $100,000 in student loan debt, maybe you should find out some steps to get ahead…

There are very few examples and a very small percentage of people who are motivated enough to learn all their is to know about financial planning on the whole…

I would love to hear an example of someone making $XXX,XXX a year who pays $2000/year for cable, $40,000/year for the mortgage, $10,000/year in car expenses that is “too good” to speak to a professional on some ideas for their finances.

I also agree that the CFP is becoming more and more worthless as the salespeople achieve this mark. It is still the marquee designation in the field (which is why there are more CFPs than CIMAs). I always say you should look at the CFP as the de minimis qualification. If your advisor is not willing to put in the time to get the CFP, then you need to look elsewhere. But, if they have the CFP, that is just the first step in your selection process.

After that you need to ask if the person is a fiduciary in all their dealings with you. This means they have a legal obligation to put your interests first, above all others, including their own. And, you must ask if they do it in all their dealings with you. Some firms will take the fiduciary obligation as they build your plan, but when it comes to implementing your plan (meaning sell product) they switch hats and are held to the less stringent “suitability” clause. After that, you need to understand how they are compensated and how much. I wouldn’t use commission folks. Certainly, good commission planners exist, but by avoiding commission salespeople you are removing tghe largest conflict of interest. Beware of fee-based advisors as they still generate a large percentage of their revenue from commissions. They should also be called commission-based. Finally, make sure you trust the person.

On another note, I agree with azphx1972 that disability insurance is needed. Again, I never make a dime on implementing a policy for a client so I say this because I believe it. Your ability to earn an income is your largest financial asset – bigger than your house, IRA, or 401(k). If you lose that asset, your entire life will be turned upside down. At your age life insurance probably isn’t needed, but disability is. When I started my firm last year, money was EXTREMELY tight, but I still ante-d up the money for my disability policy.

Then you can make even less than minimum wage since you end up working 70+ hours a week and end up owing them money. But, at least you have the required licenses to then try and find work at a reputable firm.

We decided not to use him because I felt I was at a level and had the resources to do it myself. I read about finanical planning everyday and I have a CPA for the taxes. I think I have enough interest and savyiness (is that a word) to do it on our own.

Go here to find one near you:
http://www.garrettplanningnetwork.com/pages/splash/index.htm

One caveat with this type of advisor. You need to have a higher level of trust with this type of advisor since there can still be the possibility of poor advice (because they get paid a percentage of the money they specifically manage for you an unethical advisor might be tempted to sway you away from potentially good investments such as upping your 401K withholding or buying an investment property.)

On the plus side, (at least in my case) I don’t pay *any* additional fees and since my advisor gets paid more money for making my investment sum grow, I feel there’s more of an incentive than a purely flat-rate advisor.

As I mentioned on my blog, I know of a promising young coworker who slammed his new motorcycle into a utility pole on his 21st birthday, and had one limb amputated and another one paralyzed, keeping him from doing his desk job in front of a computer. He also didn’t think he needed disability insurance at his age, but the medical bills combined with the permanent loss of income pretty much meant the end of his financial dreams. The saddest part, which I didn’t mention in my blog, is that taking care of him was such a huge burden for his parents that his mom died of stress related heart failure within a year after the accident. The last I heard, he was living at home with his dad, who works full time to pay the bills in addition to taking care of him as best as he can. Retirement is no longer an option for him, unfortunately.

You can become disabled at any time, even if you have a safe desk job. Do you participate in sports on the weekends? Are there crazy drivers in your area? I don’t believe in spending money on unnecessary things, but I feel disability insurance is a cheap expense that I would not risk going without, as long as I rely on my income from work.

I know, it won’t happen to you. Never happens to anybody, bad things that is.

1. Keep your self out of brankrupcy court…see above and add 1 million umbrella liability policy.
2. Get a living will yesterday.

Cover these things first, and then we can talk about the UNIMPORTANT stuff like investments and how I get paid.

Good luck.

I’ve had experience with three kinds of financial advisors:

1. Top of the line: A man I met while serving on the board of directors of a local cultural organization. The organization depended on the proceeds from a large endowment, and this guy was in charge of the money. During a serious economic slowdown when the market tanked and everybody in sight lost money, the organization not only did not lose, it actually gained on its investments. My husband and I hired him to manage the (now ex-)husband’s retirement portfolio. When I left the marriage, half the portfolio and the financial adviser came with me. My cash and investment holdings are now worth five times what they were when I started my solitary journey in life. This advisor gets a percentage of the take, and he is so worth it.

2. OK, warm and fuzzy, but not much better than I could’ve done myself: An old friend who went back to graduate school for an MBA and CFP. She works for a prestigious firm, wears the equivalent of my entire net worth to the office, and appears to be importantly busy all the time. Her free advice was pretty half-baked. She told me nothing I didn’t already know, and she had me put forty grand into American Funds, a mediocre performer.

3. Crooked as a hound’s hind leg: A guy with CFP after his name who was selling MSA health insurance, for which I happened to be in the market. He volunteered to do the same thing (2) did, one of those free surveys of my assets and liabilities, and then tried to persuade me to take $300,000 out of the stock market and put it in annuities. Moving on….

Looks like the profession (as it were) is pretty spotty. It does make sense that if you’re paying someone to help grow your investments, it’s in his or her interest to give you good guidance.

I saw a comment on Long Term Disability (LTD) insurance. LTD is probably the most important insurance you can have. Unless you are independently wealthy, it is the only way you will survive a long disability at a reasonable standard of living. Take a look at the likelihood of becoming disabled.
There are three important points about LTD
1. The rehab services that are provided at no cost are almost as important as the money.
2. Get it through your employer!!! The group rate is a small fraction of the independent cost.
3. This is probably MOST critical. Make sure, one way or another, that YOU pay the premium. If the employer pays the premium, any benefit you receive is TAXABLE at ordinary rates.
But whatever you do, get LTD.

I think fee-only is the most objective way to be paid for providing financial advice, because the only compensation received is directly from the client.

There are great fee-based and commission-only planners out there as well, but just be sure to ask them 1.) how they get paid and 2.) how much they get paid as a result of the recommendations they are making to you.

Also, I agree that the CFP designtation is not the be-all, end-all designation, but it’s the most widely respected designation in the industry and one of the few that denotes a certain level of competence in all areas of personal finance.