How to make the most out of the second half of 2010

It may be time for individuals to consider firing themselves – from one job, at least.

For those who act as their own financial advisor, now is a good time to reevaluate the direction they are headed for the remainder of 2010. Consider past performance and how assets are positioned for growth throughout the next half of the year. Have investment strategies performed well and protected personal wealth through the turmoil of recent years? Are there safeguards in case of death or business reversals? Are portfolios positioned for future growth?

To one degree or another, many already receive financial advice – from the Internet, media and friends. Amid a flood of information, people make major decisions about their financial lifestyle, investments and asset management, either consciously or by default.

For those individuals currently going it alone, now is a good time to honestly ask how do-it-yourself financial planning is working.

Who needs a financial planning professional?

Everyone gets an occasional hand with budgeting, evaluating a mortgage, deciding how to invest a 401(k) and the like. But when the dollar amounts are large and long-term financial goals – retirement, college savings or the future of a business – are on the line, the safest plan is to engage in ongoing, customized financial planning with a professional.

In most situations, a good rule of thumb is to engage a financial planner when one’s investable assets exceed $100,000 and/or household income exceeds $150,000.

Business owners and professionals often discover the hard way that they should focus on their own core expertise – and hire a professional to help manage the financial complexities.

What to look for

The key to a positive relationship with an advisor is to seek an experienced professional who analyzes individual situations and provides independent guidance. Financial planning is a process, not a product. One logical place for individuals to begin the search is with their banker. He or she should be able to recommend someone internally with that specialty, which not only enables a holistic financial approach, but also provides an extension of that already established trusted partnership.

These six issues should be discussed with any potential advisor:

• Credentials. Ask the prospective financial planner what academic degrees he or she has in related areas. Find out about professional credentials, such as Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC), which indicate highly trained professionals.

• Experience. Look for an advisor with at least 10 years of experience, plus a team. There is much to gain from an advisor who has experienced all the twists and turns of the economic roller coaster.

• Team approach. Explore the experience of the advisor’s team. Do they provide access to professionals with complementary expertise in banking, investments, insurance, trust and tax law? A tailored team helps navigate complexities and achieve financial goals.

• Philosophy. A financial advisor should clearly explain his or her philosophy of wealth management. Since each client is different, a good planner will also listen to their client about exploring financial goals, family situations, business needs, risk preferences and so on. If the “plan” doesn’t fit an individual’s specific needs, it’s not worth pursuing.

• Process. Building a strong financial future is a long-term process, not a one-time decision to buy an investment or insurance product. An advisor should focus on implementing a process that strives to achieve goals and not one that is product- or commission-driven.

• Fees. A financial planner shouldn’t be shy about discussing compensation. It’s important to know whether the planner gets paid on a fixed-fee or hourly basis, or earns commissions or incentives from providers of financial products. A good planner will be open to discussing his or her incentives and how they relate to the client’s financial goals.

How to get started

As suggested earlier, begin with current relationships – if the individual’s personal banker is unable to assist, talk with other trusted partners such as an accountant, lawyer or friend in similar financial circumstances – and ask if they can recommend a financial planner.

Then conduct interviews. Before hiring anyone or doing anything, ask the financial planners about the issues listed above – make a comparison based on facts. Find a financial advisor that instills trust. There needs to be “chemistry” for the relationship to work well.

Above all, start moving forward. Don’t be discouraged by past setbacks, and don’t let present uncertainties cause paralysis. Look to the future, and begin building toward targeted goals.
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Joe Schmidt is a senior vice president in private banking for UMB’s Investment & Wealth Management division in Denver. Joe may be contacted via email at


Categories: Finance