Pick a Planner Based on Style, Fees

A financial planner is someone trained to give advice and develop plans on a range of issues: budgeting, debt management, investing, retirement, estates, taxes, and insurance.

Planners can sort out an often complex array of financial products and needs and either get you started with a single session and plan or work with you over the years.

They charge hefty fees, but often pay for themselves.

You may not need such help, especially if your finances are simple enough that generic advice, such as that offered by books and mutual-fund companies, covers your needs.

Figuring out who to trust with your finances can be bewildering at best.

Anyone can hang out a shingle with no credentials, says Charles Jaffe, author of "The Right Way to Hire Financial Help" (MIT Press, $25).

And when planners do have credentials, the array of names is staggering: CPA, CFP, ChFC, CFS, PFS, RIA, and many others.

The initials indicate training (see box, below and right) but mean little compared with whether you feel comfortable with the adviser's individual approach and fees, Mr. Jaffe says.

Fees for financial planners break down into two basic types:

* Some planners collect commissions on products sold, such as mutual funds, annuities, or life insurance, but don't charge clients directly.

* Other planners charge consumers a flat, hourly fee for advice.

These "fee only" planners tend to recommend a broader range of investments, because they won't focus on accounts that earn them a commission, says Steve Rhode, president of Debt Counselors of America in Rockville, Md.

Many financial experts recommend fee-only planners. But the key is getting your money's worth. In some cases hiring someone who works on commission may be more economical.

For instance, lots of people prefer to buy and hold investments. They may be better off paying a commission.

"If you're going to pay a fee, you'd better get more advice than 'Do nothing,' " Jaffe says.

But remember: You pay for the financial advice, whether through fees or commissions.

More important than how (and what) you pay is your comfort level.

"You're looking for someone you can tell your most intimate secrets - things your parents, siblings, and kids don't know," Jaffe says.

John and Fatima Penrose, a Massachusetts couple who recently hired a financial planner to help them with their budget, second that notion.

Going through our finances is "like marriage counseling," says Mr. Penrose. "It has brought us closer together."

Check with your state's securities division to make sure no one has registered complaints against a planner you're interviewing.