Last Updated Feb 5, 2010 11:45 AM EST
Do I need a professional financial advisor?
I can think of some circumstances where a planner is a must. For example:
1. You earn good wages but cannot manage to save a dime. You need a reality check. Someone has to show you — in dollars and cents — how little you'll have when you retire unless you shape up. Most of us shape ourselves up. If you 't, get help.
2. You face a question that can be answered only by someone with technical expertise. For example, your company might have made you an early-retirement buyout offer and you want to examine your alternatives. Or, you're retiring and have several choices about how to handle the money in your retirement plan. 's a onetime decision with many tax and personal ramifications, and you want to get it right.
3. You're following your own plan — for savings, investments, and insurance — and wonder if an expert can improve it. Arrange for a meeting at an hourly fee. Make it clear that you want to talk about strategies and concepts, not sit through a sales pitch for financial products. (You shouldn't be with a "selling" planner in the first place.) Make no decisions until you've gone home and thought about it.
4. You have a substantial amount of money and lack the time, interest, and knowledge to manage it yourself.
5. You're not interested in planning, won't do it yourself, or are uncomfortable making decisions on your own. You start with a plan but don't have the discipline to keep it up. Find a planner and off-load the job.
6. You're pretending everything is fine even though you have only $5,000 in retirement savings and $25,000 in credit card debt. A planner can yank you out of denial and ease you onto a more productive path.
A talk with a planner will have one of three results:
1. You'll find a wonderful adviser who makes suggestions you're grateful for and whom you'll decide to work with on a continuing basis. These will almost certainly be fee-only planners.
2. You'll feel more confident that your personal decisions have generally been good ones and will continue managing your affairs yourself. You'll incorporate some of the planner's new ideas.
3. You'll run into a planner who makes you doubt your competence while urging you to rely on his or her advice. Or a planner who says that you'll do even better by buying the products (especially annuities) that he or she sells.
In this last case, turn up the volume on your humbug detector. These planners earn commissions and plan to earn them from you.
Excerpted from Making the Most of Your Money Now by Jane Bryant Quinn
Copyright 1991, 1997, 2009, by Berrybrook Publishing, Inc. Reprinted by permission of Simon & Schuster, IncBuy the Book