Simply put, financial planners help people manage their money and hopefully even help them make some. They use their expertise in investment strategies, securities, insurance, pension plans, real estate and taxes to develop financial plans for individuals and businesses.

When it comes time to finding the right financial planner, you are going to want someone who can provide objective, knowledgeable advice about managing this important aspect of your life. Therefore, you should exercise caution when choosing someone with whom to entrust your financial resources.

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It is always helpful to begin your search for a financial planner with recommendations from friends, relatives, and colleagues. Carefully consider the education and professional background of prospective planners. Financial planners who hold the designations RFC (Registered Financial Consultant), CFP (Certified Financial Planner), or ChFC (Chartered Financial Consultant) or who are members of the National Association of Personal Financial Advisors have codes on ethics, honesty, and conflicts of interests, which they are obligated to uphold.

The Financial Planner Interview
Once you have selected a prospective planner, schedule a preliminary interview. Typically, financial planners will offer a free one hour initial consultation. This allows them to screen your information to see if they want to accept you as a client. However it is also your opportunity to determine if this advisor is right for you.

Question the financial planner about his or her professional background, education, employment history, investment philosophy, and areas of specialization. Ask for the names of recent clients and examples of plans and monitoring reports. Ask how the planner keeps current on financial matters. Also ask how the financial planner expects to be compensated (e.g., fees, commissions, or a combination of the two) and get a written estimate of the cost for services.

Disclosure Form
In addition feeling comfortable with your financial planner, it will be important for you to determine what the total costs for his/her service will be, and what the total compensation generated to your financial adviser will approximate. Most financial planners will use a “Disclosure Form,” which highlights various compensation issues that may be of concern. Its purpose is to provide full and specific disclosure as to how the financial planner and planning firm will be compensated if you decide to accept and implement the planner’s recommendations. In addition, it can help you generate a fair comparison between various advisers’ costs when doing your evaluation.

Some common terms to be familiar with include:

Trailing Commissions: Referral fees are a form of trailing commission. Typically, referral fees are paid by an outside vendor for the planner’s referral of your business.

Surrender Charges: These are charges deducted from the balance in your annuity policy or insurance contract if the policy is cashed in or surrendered early. These charges apply primarily to insurance and annuity products and may vary from product to product. A portion of the surrender charge is used to reimburse the insurer for the commissions paid to the planner at sale.

Back-End Fees: Similar to surrender charges. An amount deducted from the balance in your investment if the investment is sold early. These charges apply primarily to mutual funds.

Contingency Fees: A payment that is contingent on certain events. For instance, the planner or planning firm earns a payment only if they can find a buyer for the non-performing investment property.

Performance Compensation: Compensation is contingent on reaching certain performance objectives. For example, if the investment earns 10%, the planner or planning firm may earn 0.5%, but if the investment earns 20%, the planner or planning firm may earn 3%.