Who's watching your finances?

Posted: Sunday, July 01, 2007
Not knowing whom to trust is one of the great tragedies of life. We all know times when we have tried to warn a friend or a loved one about a person who we did not trust, or maybe we are the one who would not listen to someone who we later found out was simply trying to save us heartache.

In the financial world, knowing whom to trust can be even more daunting. After all, you’re talking about trusting a person you barely know with all of your assets. A mistake of badly placed trust can be tragic in this arena. On that happy note, let’s go to our question of the month.

Q: I am a 77-year-old widow. My husband placed all my assets with a financial planner he liked. When my husband died several years ago, I learned that my planner had secured a loan from him for $100,000. The planner said my husband authorized everything, but I always did the bills through 40 years of marriage. My husband made the money and I managed it. So, this agreement does not seem right to me. Furthermore, I recently asked him for an updated financial statement of my assets and he said not to worry, my accounts are doing fine.

I read your column every month and I just don’t know where to turn. I do not think I have much left after this person’s management, so I don’t want to spend a lot of money. Can you help?


A: Every state is a little different, but we would suggest that you start by calling your state’s Attorney General’s Securities Division and telling them your story. They will not charge you a fee. Most states also have a Senior Citizens Protective Services Division. I would think that both of these agencies would love to talk to your so-called financial advisor.

As a general rule of thumb, a good way to pick a financial planner is by asking your friends whom they use. If they like the person and are comfortable with their relationship, you may be as well. Also, you may consider the services of a Certified Financial Planner (CFP). This means she or he, on top of any mandated securities licensing agreements, has taken extensive classes, proctored examinations, and a two-day comprehensive exam that only has a 57 percent pass rate. Trust us, it’s tough!

Lately, the financial planning business has gotten a bad case of designation proliferation. Rest assured, CFP remains the mark of excellence. However, it does not mean you will get along with every CFP or that they will all have expertise in your area of concern. (Be careful: I have recently heard complaints that brokers are using the CFP marks, as well as other designations, without actually completing the course involved.) To see if your planner/broker is a CFP, call 800-487-1497 or go online at www.cfp.net.

The following is a list of popular designations. Certified Senior Advisor (CSA), Chartered Financial Consultant (ChFC), Registered Financial Consultant (RFC), Certified Estate Planner (CEP), Certified Life Underwriter (CLU), and Life Underwriters Training Council Fellow (LUTCF). Of course, our readers will know that we consider CFP to be the mark of excellence in the financial community. The Chartered Financial Consultant (ChFC) designation is also well respected and requires a lot of study. But, the other designations can be considered complimentary, either because they are fairly easy to obtain or, in the instance of CLU or LUTCF, are concentrated in one area of planning. In their cases, it’s life insurance.

As Mrs. Johnson, Dan’s first grade teacher at Lawrenceville Elementary School in Lawrenceville, Georgia, used to say, “Never, ever, be afraid to ask for help. All smart people do.” So thank you for asking. Until next time, your money matters.

Dan Searles, CFPâ, is a financial planner and a Registered Representative offering securities and advisory services through National Planning Corporation, member NASD/SIPC, and a Registered Investment Adviser. Medallion Financial Group and NPC are separate and unrelated companies. Send your questions to Senior Money Matters, at Dan.Searles@natplan.com, or call Dan at 1-800-878-9704.

National Planning Corporation does not endorse the opinions expressed in this column. The information here is not to be considered as financial, tax or legal advice. As with any financial, tax or legal matter, consult your qualified adviser before taking action. No investment strategy can ensure a profit or protect against a loss.

Categories: Money Matters

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