Listen to the book authors, newspaper and magazine columnists and many web sites, and you will hear that [tag]financial advisors[/tag] or [tag]financial planners[/tag] are nothing more than glorified snake oil salesmen out to separate you from your hard earned money.

To listen to some in the finance industry and their champions, financial advisors and financial planners are bastions of righteousness steeped in knowledge about financial concepts so complex that no mere mortal could possibly hope to navigate the waters alone.

The truth of course lies in between. In real life, many financial decisions are frighteningly complex and unlike other decisions you may face many of them are irreversible once a mistake has been made. More importantly, some of the biggest financial issues, like retirement, take years to accomplish, and you get one chance. If you try the latest fad diet for a couple of months only to find out it doesn’t work for you, you start over a little wiser and with a little more experience. You could diet hundreds of times in your life. You could talk to friends and family, each of whom has hundreds of times of experience to share with you.

Retirement is a little bit different. You will only retire once (you hope). If you don’t get it right, you can’t start over. Most of your friends and family have never retired either. Those that have may have used techniques that are no longer available to you (generous company pension.)

This is where a good knowledgeable financial advisor or financial planner comes in. Over the course of a long career, he or she will have helped hundreds of people retire. They’ll see what works and what doesn’t. They’ll see what causes people to stumble and where the errors are made along the way, and they’ll guide you through.

Of course the key is “good knowledgeable” financial advisor. Unfortunately, there are way too many financial advisors and financial planners out there who are missing one or both of those key words. This primer is meant to give you some background into just exactly what a financial planner or financial advisor is. (For example, an explanation of what the difference is between those two terms as well as how they differ from a broker, financial representative, etc…)

Check out the Financial Advisors Primer

• IceRocket Tags: financial planner,finanical advisor

• del.icio.us Tags: financial planner,finanical advisor

• 43 Things Tags: financial planner,finanical advisor

• BuzzNet Tags: financial planner,finanical advisor

Part 4 and Part 5 of the Primer about [tag]Financial Advisors[/tag] and [tag]Financial Planners[/tag] is now up. Find out about what certifications you need to understand, and why they matter. Don’t worry, it’s a way shorter list than you might think.

Also, keep an eye out for TONS of new content once I get a chance to do final edits this weekend.

Here is a sneak preview:

• Why You Need at Least TWO Credit Cards for a Good [tag]Credit Score[/tag]
• How to Choose A Financial Advisor- Finally the Details to All Those One Line Requirements You’ve Read Before
• Financial Advisor vs. Financial Planner – More Than Po-ta-to Po-tah-to
• The [tag]Stock Market[/tag] – It’s Is DUMBER Than You Think
• And More…

In the USA Weekend that came in the Sunday (02/03/08) paper there was what may have been the shortest article I have ever seen on choosing the right [tag]financial advisor[/tag]. This article is the perfect example of why I started the Finance Gourmet.

The article is by Sharon Epperson who is the author of a book called The Big Payoff which I haven’t come across yet. Every word is true and accurate. But can you use it to find a financial advisor?

Ms. Epperson offers three big steps to finding the right financial advisor. The first is to gather recommendations, for which she lists four places to look. The second big step is to dig deeper than websites and brochures.   <Begin Guinness Commercial Voice> Brilliant! <End Guinness Commercial Voice> Then, she suggests asking about certifications, naming specifically the [tag]CFP[/tag] and the ChFC. She points out that firms should be registered with the SEC (and then throws in the confusing and/or state securities regulator), and even suggests requesting the firms’s full Form ADV. I’ll point out here that the Form ADV is one of the documents a firm is required to give you and have you sign it, so you can rest assured you be getting one.  The question is will you read it (see below)?  Lastly, she says you should meet in person and interview more than one advisor.

Again, all good advice, and all true. But, when you go to try it, you are going to hit some snags. For example, is an advisor who is listed on both the CFP website and the FPA website a better advisor than one who is listed on just one? If the advisor is just on one which is better? Here at the [tag]Finance Gourmet[/tag], we will give you that kind of information. For example, it might matter to you that the CFP website lists all CFPs for free. The FPA website has free listing too, but what about those bigger listings? Those cost extra.  So, the guy at the top of the list with the nice logo listing isn’t better, he just was willing to spring for an ad.

Likewise, which is better a CFP or a ChFC? And then, if someone is a ChFC but not a CFP then they won’t be on the CFP website. Is that ok? What about CFAs?  Are they O.K.?

Finally, I’ll also tell you that the Form ADV is a great way to get information on the firm you will be dealing with, but it is at least a twenty-page document which is filled with 80% to 90% boiler plate language. In other words reading the whole thing for each firm you are dealing with will be a big time waster. If you read Ms. Epperson’s article, you would confidentially ask for a Form ADV, only to get one and then never read it.

So, here is how to use the Finance Gourmet. Read these other articles in newspapers and magazines whenever you get a chance. They are good as a useful starting point. Then, come here to fill in the details. As you read this article notice the terms and buzzwords (CFP, ChFC, SEC, Form ADV, and so on.) Jot them down and get the details here. Then, read our in depth articles and postings.

Look for Part 4 of the [tag]Financial Advisor Primer[/tag]. It will explain those certifications all those writers keep throwing around in their articles in much more useful detail.
The Finance Gourmet