Getting a jump on finances

Getting a jump on finances
Younger market entices advisers.

McClatchy Newspapers

Published Monday, March 19, 2007

DALLAS - If you’re in your 20s, do you need a financial adviser?

Five Questions to ask a financial planner

1. What experience do you have?
Find out how long the planner has been in practice and the number and types of companies with which he or she has been associated. Choose a planner who has experience counseling individuals with needs similar to yours.

2. What are your qualifications?
If the planner holds a financial planning designation or certification, check on his or her background with CFP Board of Standards and regulatory organizations.

3. What services do you offer?
Generally, financial planners can’t sell insurance or securities products, such as mutual funds or stocks, without the proper licenses or give investment advice unless registered with state or federal authorities. Some planners provide advice only in specific areas.

4. What is your approach to financial planning?
Ask the planner about the type of clients and financial situations he or she typically likes to work with. Make sure the planner’s viewpoint on investing isn’t too cautious or overly aggressive for you. Ask whether the planner will carry out the financial recommendations developed for you or refer you to others who will do so.

5. Will you be the only person working with me?
The planner might work with you or have others in the office help you. You should check out everyone who will be working with you.

The financial services industry thinks so. With so much focus on baby boomers, some planners are realizing they need to tap into a younger market as their older clients move out of their wealth-accumulation years and into retirement.

"Financial planners are looking more to build multigenerational relationships," said Mark Johannessen, president-elect of the Financial Planning Association. "If you don’t build a relationship with the children, then the years that you’ve spent with Mom and Dad may just end when Mom and Dad’s life ends."

So even young people can expect to be solicited - in person, over the phone, by mail or through advertising - to sign up with an adviser.

And the fact is, everyone can use a good adviser. Young people who have even a little bit of savings could use some sensible advice on how to invest it. And those without any savings especially could benefit from an adviser telling them to start saving.

"I’ve got clients who started with me who were investing $150, $200 a month 25 years ago, and now they’re worth millions," said Bill Carter, president of Carter Financial Management in Dallas.

The trouble is, much of the industry is set up to deal with older clients.

If a planner charges clients based on assets under management, that’s problematic with a young client with minimal assets, said Bobbie Munroe, a certified financial planner in Atlanta. "Planners are uncertain of how to charge them," she said. "Planners who ... want to work with this age group should consider adding annual retainers and hourly rates to their fee options."

Chris Young, an adviser at Quest Capital Management Inc. in Dallas, said young people need a planner with a different philosophy.

"They should look for a comprehensive planner over a pure stock picker or even pure wealth manager," said Young, 37. "Their needs are usually goal-planning, employee-benefit advice, cash management, student-loan reduction, savings advice and risk management."

Carter’s firm also has planners who specialize in working with and courting young clients. William Taylor, 33, is one of them.

"We’ve always made a concerted effort to attract what we call our emerging clients - that next generation," Taylor said.