by Bruce Helmer, President of WEG

Hiring a financial planner, however, can be a challenge in itself. You should ask several basic, but critical questions to get a feel for the quality of the service you will receive.

1. How many years has the planner been in the industry and what professional designations does the planner have? There is a high attrition rate in the financial services industry. Hire someone with experience who is likely to remain in the industry and meet your needs over time. A credential does not indicate competence, but the pursuit of a credential can demonstrate commitment to the profession.

2. How does he or she get paid? Financial planners earn compensation from fees and commissions. The advantage of working with some “fee-only” planners is you avoid conflicts of interest because they are not trying to sell you anything. They make their fee from writing the financial plan. However, because fees are the sole profit center, they may be high. Also, a fee-only planner may have no motivation to inspire clients to implement a plan, so it will collect dust — a big reason plans fail.

If a planner receives commissions instead of fees, will it cost you more? Not necessarily. Many people use travel agents to book flights and hotels, and the cost may be less than if they arranged the trip themselves. Acquiring financial products is similar. You can acquire products directly from the entity distributing the product or through an agent — the financial planner — and the cost may be the same.

Another form of payment advisors may receive is through annual fees based on assets under management. Because of the many ways of compensation, it is important to discuss this with your advisor beforehand. That’s why at Wealth Enhancement Group our advisors work with you to find the best method for your individual situation.

3. Is the planner captive to a larger corporation or independent? Many planners are just salespeople who have a vested interest in selling a product. Don’t you want a planner who is independent — with responsibility to you instead of a parent company?

4. How many clients does the planner have and what is their average net worth? If planners have few clients, you might wonder how good they are. If they have many clients, you may not receive a high level of service. A planner who serves primarily millionaires may not devote time to those with less. On the other hand, if planners work primarily with people who have less, they may not know the intricacies of trusts and tax-advantaged investments.

5. How many people does the planner have to support him or her? The number of people in support roles tells you something about the service you will receive. To give you a benchmark for evaluating staff support, Wealth Enhancement Group has six staff people for every financial planner.

6. How do they address issues on which they are not experts? If planners do not have working relationships with experts in taxes and accounting, find out how they will address issues that require such expertise — and what it will cost.