Hunting for a financial planner? First off, be your very own

They seem to be everywhere. Financial planners appear between tackles in the Super Bowl. Their full-page ads turn up in magazines and newspapers. The columns of listings for financial planners grow longer in the Yellow Pages with each new edition.

Since 1983, membership in the 15-year-old International Association for Financial Planning has nearly doubled, rising from 12,659 to 24,179. Some of the people in the IAFP are accountants, lawyers, brokers, or insurance representatives and do not do full-time planning. But two-thirds are practicing financial planners, an IAFP spokeswoman says.

The business of financial planning has mushroomed so fast that it's hard to know who the various kinds of planners are, what services they offer, what they might be selling, and whether you really need one.

The financial-planner species comes in many forms.

There are fee-only specialists who don't sell anything other than their planning services and so aren't motivated by commissions on financial products.

There are planners whose only income is from commissions, either because they work for an insurer, brokerage, or some other company, or because they represent several financial-service firms.

And there are ``hybrids'' of the two who charge a fee and can sell products.

All of them have a place in the business, and an honest planner in each category can do a good job for the right kind of client. You, the financial planner

Then there's a fourth variety of financial planner -- yourself.

In many cases, says Thomas J. McFarland, a planner in Burlington, Mass., people read about financial planning or see an ad somewhere and decide they need the services of a full-line planner. What they need instead is to ask themselves some basic questions:

Do I have three to six months' take-home pay in a secure savings account?

Do I know how much life insurance I need, and have I bought it?

Do I have an individual retirement account (IRA) or some other retirement savings program, and am I funding it regularly?

Do I know how much I'm spending and how it compares with income?

If I have children and plan to send them to college, do I have a plan in place to save for it?

Do I have a will, including trust provisions for any children?

For many people in moderate income brackets, just coming up with positive answers to these questions may be all the financial planning they can afford. Even many people in higher brackets haven't gone through these steps or looked at some of the savings and investment alternatives that fulfill the needs.

``For a great many people, a complicated financial plan is not needed at all,'' says Lewis J. Altfest, a planner in New York. ``People come in who don't have much in savings and they want to start putting money in the stock market or municipal bonds. I might tell them to take care of these other things first. It may not make them feel good, but it's really the best thing for them.''

The reasons for doing at least preliminary financial planning yourself are many and perhaps obvious.

One of the best reasons, however, may not be so obvious: The more you know about your own financial situation and what you can afford and your risk tolerance, the less chance you have of becoming a target for product-oriented planners, brokers, and other financial service people who want to sell you something you might not need.

``Even though someone has been educated about finances, a good salesman can uneducate them very quickly,'' says Ronald P. Meier, a planner in Kingwood, Texas. ``Salespeople are trained to overcome objections, to have a good story to back up whatever they're trying to sell.''

Having a better idea of what you want and can afford will help overcome some of these tactics, he believes. Staying on the right track

Not surprisingly, all the planners interviewed say that even those who do their own plans should see a professional planner eventually, if only to have someone say they're on the right track.

Even for people of modest means, a planner may be able to suggest other places to save, find less-expensive insurance coverage, or point out ways to provide for college while decreasing taxes.

``It may be worth it to go out and spend $200 or $300 for a couple of hours just to have someone tell you you're right,'' Mr. McFarland says. ``I've had people come in who have done their own work and their own calculations, and a lot of times they do very well.''

Most fee-based or fee-and-commission planners charge from $75 to $150 an hour. But once you get on the right track, you may only have to see a planner once every few years.

``There's not a whole lot of mystery to financial planning,'' acknowledges Joseph Deitch, a planner in Newton, Mass. ``On the other hand, people don't do it.''

``They get stuck in various holes and don't know what to do,'' he says. ``They need someone to guide them into making some decisions.''

Sometimes, says McFarland, a planner will hand a plan over to a client, who will then be unhappy because nothing else happened at that moment.

Often, these planners assert, their customers will finally follow the plan precisely because they don't want to waste the money they spent on the planner.

But it is possible to find your own motivation. If you don't have an individual retirement account or a savings program, that may be all you need to get going.

Or if you have realized that it's cheaper to have a savings account to buy things instead of charging them, that may get you going. Or if you have a child and someone just told you it may cost more than $100,000 to get him or her through college, that may do it. Now that you're ready to start

However you get the motivation, start by taking specific steps to answer the six basic financial planning questions at the beginning of this article.

Savings. ``Pay yourself first'' is a clich'e, but it's still true. If you don't have a savings plan, work out a percent of your salary that you can live without and put it in a separate savings account before paying any other bills. Many employers now have direct-deposit services for your pay. See if you can put a portion in a separate bank account apart from your checking account. Whatever course you take, keep at it until you have at least three months' take-home pay stashed away.

Life insurance. While the number and variety of life insurance products keep growing, you can start with a basic term policy until you figure out which of the more sophisticated products you might want. For about $130 a year, a 35-year-old nonsmoking man can get $100,000 of term coverage. Call several independent agents and get some quotes.

An oversimplified way to determine life insurance is to figure out how much your family would need to continue its present life style if the main breadwinner were to go.

If it's $30,000, you should have $300,000 of insurance, assuming a 10 percent rate of return on the proceeds. But that can probably be reduced somewhat because a spouse might work, and social security will help support a mother with children. Part of the insurance settlement might also be used to pay off a mortgage or to complete a college education fund.

Also, your employer may be providing group life insurance equal to two or three times your salary. At some companies, you can increase this group coverage by having a little extra taken out of your pay.

IRA. As we've said many times, you don't have to put the full $2,000 in an IRA every year. Many banks and thrifts will let you start with $25 or $50. Once you get started somewhere, you'll see other IRA opportunities and make an effort to save more each year.

Also, if your employer offers a 401(k) or 403(b) salary-reduction retirement plan, sign up for it. While your investment choices are more limited, the withdrawal penalties aren't as stiff and you can usually borrow against it.

Income vs. outgo. If you haven't done anything like this before, fill in the tables on Page B4 and see where your money is coming from and where it's going. Knowing this will either encourage you to save more or tell you it's time to change spending habits or increase income so you can start saving. While you're at it, work on the personal balance sheet on B3. Again, you may be pleasantly surprised to find that your ``net worth'' is greater than expected.

College. Here's one area where some professional help should probably be sought. If you are going to be facing a $50,000-to-$100,000 four-year college bill for each child, you not only need a savings program, you also need to find the most effective way to make that money grow. Now we're talking about investments, including mutual funds, stocks, and zero-coupon bonds, as well as ways to keep the tax consequences as small as possible. A college financial aid official should be able to tell you about options for assistance and loans, and a planner might suggest some savings and investment alternatives and tax strategies.

The will. Another professional -- a lawyer -- must be used here. Even if a husband and wife are renting and have built up few assets, they need a will. Without one, the distribution of your property will be determined by the state, not the surviving spouse. Your parents may get money the spouse could use.

If there are children and no will, a court-appointed guardian will probably be assigned to watch over them. The guardian will get a fee paid out of the estate. Also, your will can specify who should serve as a guardian -- perhaps a relative or close friend -- to care for the children, should both the mother and father die. Again, if there's no will, the court will appoint a guardian. It might be a relative, but perhaps not the relative you would have wanted.