3 tips for finding a great financial planner

Do you have a financial plan? I mean a real, written financial plan that details exactly what you need to be doing today, tomorrow and next year to accomplish each one of your financial goals?

A real financial plan can have a substantial impact on your ability to successfully retire. It also can have a significant impact on giving your children a college education or what will happen to your family in the event of your death.

If these problems are resolved, your quality of life will improve substantially. You'll have a new peace of mind concerning your financial future and a new sense of security, with the realization that you are in control of your financial destiny. It would also mean improved family relations, free from financial stress, which happens to be the major cause of divorce.

Without financial management, you may feel uncomfortable and insecure. You don't know where you are and don't know what you should be doing. If you have not taken the time to plan your important goals, such as your retirement or your children's college education needs, you have a void in your life. You may be spending a lot of time doing the wrong things. This creates real anxiety and concern over what your future may bring.

Yet many people, in spite of the obvious need to be doing something effectively, continue to spend all they earn on their current lifestyles.

With so many statistics confirming that almost all of us are on a train ride headed toward financial disaster, why do we not get off the train?

As silly as it may seem, most of us just have not reached the right state of readiness yet. I don't mean we don't have enough of the right reasons or aren't concerned enough about our future. What I mean is, we haven't tried to visualize what it would feel like to live in financial failure.

Can you imagine having to tell your son or daughter, "I'm sorry you can't go to college because I can't afford to send you"? Or, later in life, having to knock on your children's door and say, "I'm sorry, I need to borrow some money to help pay my bills"?

Now for the opposite side of this coin: What does life feel like for someone who has planned?

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A few years back, I informally surveyed my clients who had been active for at least five years. I asked, "What was the major benefit you think you received from the planning process?"

The overwhelming majority of answers was "total peace of mind, financially."

The bottom line for most of these people was a single word: "relief." I keep hearing repeatedly, "It felt like someone had lifted a thousand pounds from my shoulders."

The improvement in the quality of your life comes from the sense of security and knowledge that you're in control of your financial destiny. This is what living with a personal financial plan is all about.

So how to you select a good financial planner? Finding a competent adviser takes some real effort. You just don't want to choose the first one you find. Therefore, here are a few things to consider in making your assessment and decision.

First, how long has this person been in practice? Financial planners continue to learn the more they see. Each new client brings a different set of issues to be resolved and has different experiences to share. They say 20/20 hindsight is golden. In the case of a financial planner, they get the benefit of that hindsight from each new client they have. Therefore, having a planner that has many years of experience pays off.

Next, be sure to check references. I don't mean asking for one or two, but instead ask for a list of at least a dozen. You also want references of people who have used the financial planner for several years so you can ask how well they've fared. If the planner has been in business for a while but does not have many seasoned clients to offer as references, that may be a good clue that the clients haven't fared so well over time.

Lastly, what is the planner's principal source of income? Do they sell products to you from third parties like life insurance and investments companies from which they are paid commissions? Or do they make a living primarily from the financial planning fees you pay?

Many planners make most of their money off commissions from the sale of products and investments and only a little bit of it from fees. This raises a crucial question: How objective can they be if they're giving you advice on what you need to do and buy if they are profiting from what they chose to recommend to you? (Some products pay a lot more in commission than others.)

Finding a good planner is just as important as finding a good doctor. The reason? Just like your doctor, with a planner, your financial life is at stake if you make the wrong choice.