Who needs a financial planner?

What you should know when choosing a financial planner

Nervous about the stock market?

Excited about prospects for your financial future?

Bear or bull, there?s no time like the present to get your financial picture in better focus. But what if you?re not sure how?

Not to worry. There are plenty of financial advisers in the Flathead offering their help.

The phone-book yellow pages include nearly two dozen Flathead Valley listings under financial assistants, financial planning consultants and financial services. Dozens more professionals are out there educating, guiding and managing assets for clients with everything from a few thousand dollars to millions.

Certified financial planners have completed a comprehensive two-year course of study through such institutions as the College for Financial Planning. Accredited asset management specialists earn their credentials through the same college or similar institutions, but with a different rigor. Other financial advisers have their own training.

So how does an investor decide who to trust in making money decisions?

?THE FIRST thing you?ve got to ask yourself is, are you going to follow the planner?s advice?? Edward Jones Whitefish representative Joe Coco said. ?Because if you?re going to choose somebody and you constantly fight against them, it?s a waste of time and money.?

Coco is an accredited asset management specialist, one of nine Edward Jones representatives in the Flathead. He?s been at the job since December 1993.

?If a [financial planner] tells you to do certain things and, without even blinking an eye, you say, ?Well, we can?t do that right now but we?ll get back to you when we can,? essentially you have not leveraged your position,? Coco said. ?You?ve chosen not to follow his advice.?

He requires clients to fill out net worth and cash flow statements.

?How much are you spending every month?? he asks them. ?They hate that question, because they don?t know ? But if I?m going to help them I have to know exactly where they are at.?

Marge Fisher is a certified financial planner with LPL Financial/Linsco Private Ledger in Whitefish. She has worked in the field more than 20 years, her first three years with Edward Jones and the rest of her career as an independent planner.

Her first piece of advice in shopping for a financial adviser draws on common sense.

?Do they have some experience? It takes a lot of time to learn things about financial planning,? Fisher said. ?You don?t just learn everything in 30 days.?

Through their years of practice in financial consulting, word gets around.

?Talk to other people,? she advised. ?Do they have a good reputation??

And be sure they have your financial interests, not just their own, in mind.

?Of course I have a bias here but you should be independent, you should be self-employed,? rather than being affiliated with an investment company, she said. Fisher is not downgrading the quality of others? services, but said that during her years as an employee she felt pressed to create commissions.

LPL Financial is a broker/dealer, as are several other investment firms. But as an independent agent, she said, ?You can give independent financial advice so you?re not locked into any proprietary products.?

Coco also advised finding a kindred spirit.

?Figure out if your value system is the same as the person you?re seeking out for advice,? he said. So if you like to live on the edge, don?t hire a stodgy financial adviser.

?For me, I don?t like debt,? he said. ?But there are people out there who are very competent at what they are doing and who know debt has an appropriate place in building wealth.?

Fisher draws a distinction between her personal bent and her clients? welfare.

?I?m more of a risk-taker but I like to be more conservative for my clients,? Fisher said. For one thing, ?you look at the client?s age ? if they?re young and have lots of time to make investments, or if they?re older and might need to generate some income? from their investments.

And find a straight talker.

?Work with somebody who tells you how they are going to get paid right up front,? Coco suggested. ?Sometimes we don?t do a very good job of explaining how we get paid, partly because the industry makes it very difficult to explain.? Stock transactions and bond trading, for example, follow different compensation systems.

Coco outlined two main methods.

A wrap account arrangement pays the financial adviser a percentage of the client?s total portfolio. It?s a clean, predetermined arrangement decided up front but, Coco said, can sap the adviser?s incentive to do the best job if your portfolio is shipped off to a third-party investor.

Transaction-based arrangements pay your local financial adviser every time a buy or sell decision is made. It?s gotten a bad rap in the industry, but a well-managed account can end up costing less, he said.

?They both have their pros and cons,? Coco said. ?As long as everybody?s expectations are being met, they both are moral and ethical.?

WHEN SETTING UP investments, a financial adviser should choose companies tailored to a customer?s long-term and short-term goals, risk tolerance and the like.

?It?s like buying a car,? Coco said. ?You don?t buy one and then get a different one in three months ? If you do a good job of setting up your customer?s portfolio in the first place, it only needs to be maintained. It doesn?t need to be changed.?

Watch out for red flags ? an adviser who doesn?t get a feel for your goals before committing your money, doesn?t ask about your non-investment financial situation, can?t articulate complex concepts in a way you understand.

IN TODAY?S dropping market, Fisher said the long view helps.

?You have to be patient. We?ve gone through all these things before,? she said, listing the savings and loan crisis of the 1980s and 1990s; Black Friday on Oct. 19, 1987; the tech crash of the early 2000s.

?But there?s always been a crisis,? Fisher said. ?You have to look at a year or two on these things. Most others have taken a year or two to come back, sometimes 18 months. The subprime rate will take a while to shake out.?

Coco said he has been proactive with his clients, calling them to see how they?re feeling financially. He, too, reminds them of past crises.

?The way you feel now is the way they felt then,? he tells jittery clients. ?So focus on what you can do now,? like building up savings, reducing debt, monitoring expenses.

He?s not seeing more financial planners in the valley but he is seeing more brokers who buy and sell financial holdings.

?You should compare personalities,? he advised. ?If you like to buy tax bonds and stocks, work with someone who does that ? Not everyone needs a financial adviser.?

So choose your path carefully.

?When you?re looking for a financial adviser, are you looking for a doctor or a drug pusher?? Coco asked.

?A doctor says let?s run these tests, get the family history ? do the diagnosis. Then he?ll tell you from that, ?I think we ought to prescribe this course of action.? As opposed to somebody who says, ?Hey, I?ve got something that?s really going to make you feel good.??

Reporter Nancy Kimball can be reached at 758-4483 or by e-mail at nkimball@dailyinterlake.com