The hows of picking and working with a financial planner

OK, so you filled in all the tables in this section. You've got your life insurance, the IRA's building up, the kids' college fund is growing on schedule, and you have a few months' savings built up. Now, you find there are still a lot of questions about the best places for your money. Or maybe there's more than enough money to meet the basic planning needs and you want to know what to do with the rest.

Despite the do-it-yourself theme here, there are times when a professional financial planner should be called in. Maybe you've done a lot of the work yourself and just need someone to say you're doing fine, or suggest a few adjustments. Maybe a planner can explain particular investments, like zero-coupon bonds, and how they would work for you. Or maybe you just don't have the temperament for dealing with finances.

If so, you probably need a financial planner. But how do you find one?

You can start with referrals. Ask friends or people you work with if they have ever used a financial planner or adviser.

But even though the financial planning profession has mushroomed in the past few years, you may have trouble finding someone you know who has used one.

In that case, you can find advertisements for financial planners in newspapers, magazines, even the Yellow Pages. When you call one of these people, ask about fees and ask for references. A reputable planner won't object to naming a few of his or her current or former clients. Talk to them and see if they were satisfied with the planner.

More important, perhaps, see if their financial situation is anything like yours. If all the planner's clients are earning several hundred thousand dollars a year and investing in private real estate partnerships or commodities, the planner may not be willing to give as much time and care to someone who is making far less. Also, some planners have more expertise in certain investments than others, and one planner's specialty may not jibe with your needs or risk tolerance. Risk tolerance, by the way, is an important way to judge a financial planner. ``A lot depends on the individuals and what experience they've had,'' says Thomas McFarland, a Burlington, Mass., planner. ``Some people say, `I don't want to be in the market. It's too risky, too volatile. But I am interested in real estate.' We can find them real estate programs to fit their tolerances.''

Mr. McFarland also maintains that the planner should ask how you feel about the risk of losing a little money even though you expect to gain more later, or how you would react to a downturn in the market.

``I might ask, `If you invested $10,000 in the stock market today and it was worth $9,500 tomorrow, what would you do?' ''

It's possible that you haven't thought about questions like these before. If not, don't try to answer right away and don't let the planner push you into an answer. After your first interview, go home and think about it. If you're married, the two of you may prefer to discover and hash out any differences at home, instead of in the planner's office.

The planner should be able to explain the possible consequences of various types of risk, but you should not let yourself be pushed into more risk than you're totally comfortable with.

If you haven't done so already, ask the planner about credentials. A degree is no guarantee of competence, but if you don't have much else to go on, it's a good place to start. Many of these people have some sort of financial planning degree, either from the College for Financial Planning in Denver, the American College in Bryn Mawr, Pa., Adelphi University in Garden City, N.Y., or one of several other accreditied schools. If so, they'll be able to call themselves a certified financial planner (CFP) or a chartered financial consultant (ChFC).

Also, a growing number of planners are members of the Registry of Financial Planners, a group of experienced planners who are members of the International Association for Financial Planning in Atlanta. You can write the IAFP at Two Concourse Parkway, Suite 800, Atlanta, Ga. 30328 for a list of some registry planners in your area.

Once you have found a planner, he or she should work with you to develop the product: the financial plan. You should not be handing over your money for investment by the planner who says ``trust me.''

After discussing your income, assets, financial needs, short- and long-range goals, and risk tolerance, the planner should present the plan in a simple format and spend the time to go over each part of it with you. You're the one who is paying for this written plan, in addition to the time for the planner, so you have the right to ask about anything you don't understand, or to challenge any of the suggestions.

Most financial plans that involve any detail can't be put in effect overnight. Arranging financing, finding the best investments, starting new investment programs, and setting up estate plans can take anywhere from three months to a year.

So don't look for instant results and don't let the planner forget to tell you of any steps in following the plan. Otherwise, you can quickly lose control of how your own money is invested.

After you begin using the plan, you should expect to see the planner again before the year is out to review everything and see how it is working. You can also begin some tax planning for the next year.

The fee for the review should be less than half what you were charged for the initial plan. Like all financial planinng fees, this one is tax-deductible. Depending on the complexity of your finances, what part of the country you live in, and the planner's experience and reputation, you can expect to pay from $75 to $150 an hour for a consultation, plus the cost of the packaged plan turned over to you.