Professional Help

Financial adviser
Planner
Investment consultant
Analyst
Wealth manager

The meaning of these generic terms may vary depending on the professional’s organization.

The titles are neither official nor regulated
No training or experience is required to use them
Anyone can hang out their shingle using them

Broker or Broker-Dealer

Legal terms for anyone licensed by NASD, Inc. (formerly the National Association of Securities Dealers) to buy and sell securities such as stocks, bonds, and mutual funds. At brokerages, these professionals are officially referred to as “registered representatives.”

Certified Public Accountant (CPA)

A public accountant who has been certified by a state examining board as having met the state's legal requirements. Although CPAs may not offer retirement planning per se, they may be able to help you find and monitor the performance of a financial planner, providing you with some “checks and balances” in the investment process.

Chartered Financial Consultant (ChFC)

An insurance agent with extra credit. A ChFC has at least three years of experience and has passed an exam on financial–planning basics, such as taxes, investment and estate planning. For more information, visit the ChFC–CLU Web site.

Certified Financial Planner (CFP)

A planner with at least three years of experience who has passed an exam issued by the Certified Financial Planner Board of Standards. These professionals are subject to disciplinary process if they violate a code of ethics. For more information, visit their Web site.

Fee-only Planners

These planners earn hourly or flat fees or percentage of the assets they manage for you; they are never paid on commission. Hybrid, or fee–based, planners may earn both fees and commissions. For more information, visit the National Association of Personal Financial Advisors Web site.

You may need to interview several financial advisers before you find the right one, or a combination of professionals, that meets your needs and with whom you have a good rapport. Be sure to monitor not only your investments, but also your relationship with your adviser—you may need to make a change if you don’t feel comfortable with your adviser and your portfolio performance.

Questions to Ask When Choosing a Financial Adviser

What are your professional credentials?
How long have you been a money manager?
How have your investments performed compared to relevant standards? Ask for proof.
What is the size of your firm?
Who will handle my accounts in case you are unable to?
How are you paid? Any professional can provide good advice, and a commission-based adviser can cost you less. The real danger doesn’t lie in paying commissions or fees; it lies in failing to recognize what motivations may be behind the adviser’s recommendations.
What is your investment philosophy?
What type of investment products do you advise about?
What information will I receive about my portfolio and how often will I be updated?
Can you give me a list of five professionals and five clients as references?

In researching information for this chapter, I interviewed Nicole Simmons Hupfer, an Investment Representative with Edward Jones. She explained that people have relied too heavily on Social Security in the past; it was never meant to be a substitute for personal retirement planning. Instead, it was intended as supplemental retirement income. She compared retirement savings to a three-legged stool:

Leg 1—Social Security
Leg 2—Employer–based savings
Leg 3—Extra investing for which you are responsible

For consultants, two of the three legs are our responsibility; we have no employer for Leg 2.

Hupfer recommends three retirement planning strategies for self-employed consultants:

Pay off debt
Save for retirement
Save for non-retirement extras

And for the magic question—How much do I need to save for retirement? — she recommends planning on 75% of your current salary for expenses and combating inflation with investments. Consultants have an advantage here too, because we can phase in retirement instead of having a “stop working date” imposed by an employer. We can continue to work part–time after we “retire” as long as we choose (be sure to check how your earnings will affect your taxes and retirement income).

A final tip from Hupfer is to have your retirement savings and investments come out of your income automatically; you won’t miss what you don’t “see.” For self–employed consultants, lean times are an ongoing concern. Set up your savings and investing so that you can suspend contributions if your income drops so low that you need the retirement savings for day-to-day expenses, then restart the contributions as soon as possible.

The biggest retirement planning challenges facing self–employed consultants are discipline, money (the availability of funds for savings), and the lack of a CFO or HR person to figure things out for you. Set yourself up to succeed by seeking professional advice when needed, making deductions and investments automatic, and keeping a careful eye on your investments.

One last thing to keep in mind when planning for retirement: don’t forget to plan for tomorrow, but live for today. Enjoy doing some of the things you want to do while you’re still able to do them; plan for and go on that cruise or exotic vacation while you still have your health and can take pleasure in fulfilling a dream. Live well!