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What is a Financial Planner?

A Financial Planner is someone who provides guidance to businesses and individuals on their investments. They assess the needs of the individual and offer guidance on a case-by-case basis. They also use their expertise in investment strategies, securities, insurance, pension plans, real estate and taxes to develop financial plans for individuals and businesses.Financial Planner at desk

Financial Planners can work for credit unions, banks and companies that specialize in offering financial advice. Many Financial Planners work independently. Therefore, a big part of the job is marketing the product and convincing clients of how valuable their advice is.

Financial Planners interview clients to determine their assets, liabilities, cash flow, insurance coverage, tax status and financial objectives. They then analyze this information and develop a financial plan customized to each client’s needs.

How to Choose a Financial Planner

Choosing a Financial Planner can be one of the most important financial decisions you make, but finding the right person may be difficult. In today’s world, there is an overwhelming selection of mortgages and rates to choose from as well as a mind-boggling array of financial products, which makes planning for your future a difficult process. As a result, many people are turning to financial advisors for advice.FP and satisfied client

Here are six tips for choosing a Financial Planner:

1. Determine your general financial goals: retirement, college savings, estate planning, etc.

2. Ask people whom you trust: ask family members if they have any recommendations or references. Also, try asking your accountant. They might offer a few good recommendations.

3. Ask the Financial Planner for references, especially from clients who have similar investment goals.

4. Check the planner's credentials: Certified Financial Planners™ have passed exams covering a number of financial topics. Ask the planner where he/she went to college. Up until 2007, a college degree is not necessary to have to be a financial planner, so it should be a question you bring up.

5. Interview more than one Financial Planner: Ask them about their experience, education, and specialties. Make sure you feel comfortable discussing you finances with the financial planner.

6. Determine how the Financial Planner will be paid. A planner could be paid a salary by the people they work for by fees based on an hourly rate, flat rate, or by a percentage of assets.

How Financial Planners Were Selected

Consumers' Research Council of America has compiled a list of Top Financial Planners throughout the United States by utilizing a point value system. This method uses a point value for criteria that we deemed valuable in determining top financial planning professionals. 

The criteria that was used and assessed a point value is as follows:



Each year the Financial Planner has been in practice


Education, specialty training and continuing education

Professional Associations: Membership in professional financial associations

Financial Certifications:

Completing at least one course of study and meeting all requirements, resulting in receipt of certification and/or professional financial designation.

Simply put, Financial Planners that have accumulated a certain amount of points qualified for the list. This does not mean that Planners that did not accumulate enough points are not good Financial Planners. They merely did not qualify for this list because of the points needed for qualification. Since this is a subjective call, there is no study that is 100% accurate. As with any profession, there will be some degree of variation in opinion. If you survey 100 clients from a particular stock brokerage company on their satisfaction, you will undoubtedly hear that some are very satisfied, some moderately satisfied and some dissatisfied. This is really quite normal.

We feel that a point value system takes out the personal and emotional factor and deals with factual criteria. We have made certain assumptions. For example, we feel that more years in practice is better than less years in practice; more education is better than less education and completing a rigorous course to obtain a financial designation and certification is better that not having done so.

The Financial Planners list that we have compiled is current as of a certain date and other Financial Planners may have qualified since that date. Nonetheless, we feel that this list of Top Financial Planners is a good starting point for you to find a qualified specialist.

No fees, donations, sponsorships or advertising are accepted from any individuals, professionals, financial institutions, corporations or associations. This policy is strictly adhered to, ensuring an unbiased selection.

10 Steps To Financial Planning

Financial planning is the process of solving financial problems and achieving financial goals by developing and implementing a personalized plan. In order to be effective, this plan must take into consideration an individual’s overall picture. It must be comprehensive, coordinated, and continuous. A true financial plan does not focus just one aspect of life, but instead seeks to take all areas of planning into consideration when making financial decisions. We recommend that you follow these ten steps for financial planning:

1) Set goals. The financial process begins with setting goals. These goals may be short-term—those which you hope to achieve within the next 12 months—or long-term—those which will take longer than 12 months to achieve. The goals you set should be specific. Try not to say, "I want to be rich." Rather, "I want to accumulate $50,000 over the next five years." Also, try to make the goals realistic. If your goals are unattainable, you may become discouraged and give up before you achieve them, which renders them meaningless.

2) Create a budget. A budget can be used as a tool in identifying how and when money is being spent. The first step is to record historical information regarding your income. The next step is to record historical information concerning your personal expenses. This information will be found in your canceled checks, checkbook registers, paid receipts, credit card statements and tax returns. You should separate fixed expenses from variable expenses. Once you have tracked your spending habits, you will be able to limit the areas where you spend money needlessly. Be sure to compare your actual spending with your projected budget. Make changes as necessary to your plan.

3) Understand your credit. If used properly, the use of credit—posting payments over time—can be a useful tool for individuals. There exists, however, the potential for credit abuse. This often leads to debt, financial problems, and may ultimately prevent the achievement of financial goals. The biggest problem with use of credit is the tendency to overspend. Interest rates at 24.99% and higher can be charged to your bill for any overdue credit card balances.

various professionals at desk4) Understand the effect of each financial decision. Each financial decision you make can affect several other areas of your life. An investment decision, for example, could have a tax consequence. A decision regarding your child’s education might affect your retirement plans. Remember that all of your financial decisions are interrelated.

5) Be realistic in your expectations. Financial planning is a common-sense approach to managing your finances in order to reach your life goals. Remember, being responsible cannot change your financial situation overnight; it is a life-long process. Spending responsibly is a way of life, not just a temporary fix.

6) Prepare for the unexpected. Set aside at least three months of income in an account that can be liquidated quickly, such as a money market fund. Everyone should have a cushion to fall back on when an emergency arises.

7) Build an investment portfolio. Each month, set aside a portion of you income—around 10 percent—in a mutual fund of your choice. Investing takes discipline. You may not see the results right away, but in time, the ten percent you set aside each month will reward you greatly in the future.

8) Check and recheck your strategy. Have your goals changed? Are the investments you originally chose still appropriate for you? Do you feel that you could assume more risk? On the other hand, would you feel more comfortable with less risk as you move closer to retirement? Rethink your investment strategy periodically.

9) Plan ahead. Get an idea of what your retirement might cost. Read your Social Security annual benefits statement, which is mailed to you annually. Find out what other pension benefits you may be eligible for through your employer. Base your retirement savings goals on real data.

10) Protect yourself. Insurance is as personal as your own needs and goals, but there are certain bases you should cover. Life Insurance: Could your family support itself if something were to happen to you? Today's insurance policies offer protection, as well as other features that can help you reach your financial goals. Disability Insurance: The inability to earn an income, even for a short period of time, can quickly erode your savings and derail your retirement plans. Disability insurance provides surprisingly affordable protection against a temporary situation that can cause a permanent financial disaster. Health Insurance available through your employer is often the best option if it is available to you. However, if you aren't eligible for an employer's plan, you may want to compare different policy options for a plan that meets your needs and fits within your budget.

How to Get Out of Debt

Getting out of debt is a key element for becoming financially responsible. It is simple—in order to eliminate debt, you must spend less than you make—not occur any new debt—and make payments towards your existing debt. To do this, you may need to make a spending plan or budget.

Don't ignore debt: Many people just ignore their debts when they experience financial difficulty. They do not understand the consequences of not paying bills. Ignoring debts will affect your credit rating. In addition, creditors may seek a judgment in effort to get payment; your bill can be turned over to a debt collector; your property can be repossessed; your wages may be assigned or garnished; you may be forced into bankruptcy.

responsible bill-payerCreate a list of all of your debts: The list should include the name of the debt, the current outstanding balance, the planned monthly payment, and the interest rate.

Create a budget: Set up a budget that allocates money for all categories of spending—food, mortgage, auto loan, etc. Develop a plan to pay off credit cards, especially the ones with high interest rates.

Seek professional help: You may want to seek professional help. Help is available for little or no cost through government programs or credit counseling services, which will work with you to create a long-term plan to pay off your debt. You may also want to consult a Financial Planner for their advice.

The only way to get out of debt spend less than you make. If you're spending more than you make, stop. Start putting every penny you can get your hands on toward your debts. Find ways to cut everyday expenses and put that found money toward those bills.


Secrets of Saving Money

Saving money is a basic concept of personal financial planning, and it is key to financial success. Here are some simple steps that will make saving money manageable:

piggybank1) Distinguish between Wants and Needs:  You will save a ton of money if you don't mistake wants for needs. Needs are pretty simple to identify—those items that are necessary to sustain: Shelter, food, clothing, and transportation. Wants are those things that improve or your life. A car, for example, is a need; unless it is necessary for your business, a $40,000 Sport Utility Vehicle is a want. Have you ever heard, "I absolutely need...", when the actual meaning was, "I really want...". This is not to suggest that you shouldn't be able to have the things you want—only that to mislead yourself into believing that a want is a need is a recipe for financial disaster.

2) Make your money work as hard as you do. You work hard for your money; now it is time for your money to work for you. The real secret of financial success lies in making your money do the work, so you can relax. Just leaving your money in an account that pays zero interest will actually make your money worth less over time. On average, inflation goes up about 3% a year, so you need to make at least that in interest just to maintain your money's original value.

3) Create savings and investment goals. Would you like to have $1 million by the age of 40 or 50, or by the time you retire? Set your own goals—but never set a goal you can't control. Your targets can't depend on your boss giving you a raise; they must be attainable by your own efforts. You might need to invest in yourself by acquiring more education so that you can qualify for a job that pays more. You might need to take more risk in your investments. Evaluate the risks involved, and understand that a larger return is often the result of putting the odds on your side.

4) Sign up for a 401(k) plan at your workplace. Most employers will automatically deduct a fixed amount from your paycheck and put it in your 401(k). Your employer will match your contributions to a certain percentage. The common match is 50 cents to the dollar; this already gives you a 50% return on the investment. Remember: if you don’t see the money, you cannot spend it.

5) Pay off all of your credit card debt. Just paying off your credit card debt will give you a return on your money. For example, if you pay off $1000 of credit card debt with an 18% interest rate, you automatically get an 18% return; it is that simple. And if you have the choice of either paying off your credit card debt or paying more of your car loan, choose the credit cards first: a car loan usually has an interest rate below 10%, while credit cards have rates at 24.99% and beyond.

Planning for Retirement

It’s quite possible that your retirement years could last as long as your working career. Securing enough income to last you 20 or 30 years takes a lot of planning and discipline. It is important to think about what your expenses will be after retirement. A good rule to follow is that 70% to 80% of current income will be sufficient in retirement. People who are retired and plan to be very active may need the same amount of income in retirement that they earn at present.

Though it's never too late to start, the sooner you begin saving, the more time your money has to grow. Gains each year build on the prior year's—that’s the power of compounding, and the best way to accumulate wealth.

Although more than 80% of workers eligible to participate in a 401(k) plan do so, few have taken the time to figure out how much they will need for retirement. Contributing money to a 401(k) gives you an immediate tax deduction, tax-deferred growth on your savings, and usually, a matching contribution from your company. When the company you work for matches your contribution, you automatically get a return on your investment.successful investor

Try to diversify. Regardless of what's offered inside your 401(k) plan, your objective is to earn a reasonable return over a long period while limiting risk. Market cycles tend to favor one type of investment. But cycles change, and because no one knows when that will happen, it's wise to spread your investments over several categories.

The Individual Retirement Account (IRA) brings together two tremendously powerful forces, both of which benefit you: 1) compound interest, and 2) tax savings. If you have money that you can afford to invest for the long term, there's really no reason not to open an IRA. Compound interest becomes even more powerful when it's not held back by the drag of taxes.

Another good idea when planning for retirement is a variable annuity. A variable annuity is a contract between you and an issuer whereby you agree to give the issuer principal, and in return, the issuer guarantees you variable payments over time. Variable annuities enable you to invest in a selection of funds, called sub-accounts. These sub-accounts are tied to market performance, and often have a corresponding managed investment after which they are modeled, such as a mutual fund. Available choices range from the most conservative, such as money market, guaranteed fixed accounts, and government bond funds, to more aggressive such as growth, small cap, mid cap, large cap, capital appreciation, aggressive growth, and emerging markets funds. Some have as many as forty or more fund choices with ten or more managers, and allow you to switch between them at no cost and without taxes.

What is an IRA? What is a Roth IRA?

IRA, or Individual Retirement Account is an arrangement allowing individuals to save money for retirement in a tax-advantaged manner. You can put practically anything into your IRA—stocks, CDs, mutual funds, cash, bonds—but not options and other derivatives. Anyone who works, whether self-employed or as an employee of a company, can set aside up to $3,000 in an IRA for the previous tax year. You must begin taking distributions from an IRA no later than April 1st of the year following the year in which you reach age 70-½, or the year in which you retire, whichever is later.

Unlike pensions and 401(k) plans, your employer does not run IRAs. Just ask a bank, brokerage, or other financial institution for an application and make a contribution. Your IRA account will grow tax-free until you withdraw the money—generally after you retire. With a traditional IRA, you may even be able to deduct the contribution from your taxable income for the same year the contribution was made.

Roth IRAs work differently than traditional IRAs. While you generally deduct contributions to traditional IRAs and pay tax when you withdraw the money, the opposite is true for Roth IRAs. With Roth accounts, you can’t deduct your contributions. But when you retire, you can withdraw both contributions and earnings tax free—your money grows for free. There is no age limit to open a Roth IRA, but there are some income limitations. You can contribute up to $4,000 a year to a Roth account, with a $500 "catch-up" for those over 50. You can withdraw the money at age 59 ½, or in the following circumstances: disability, death, or for first-time home purchases of up to $10,000.   See your Financial Planner for the most accurate and up-to-date information on these plans.

College Savings: The 529 Plan

A 529 plan is a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary. It is named after section 529 of the Internal Revenue Code. The details of the 529 plan are determined by state legislation, and while most plans allow investors from out of state, there can be significant state tax advantages for investors to invest in 529 plans within their state of residence.

There are two types of 529 plans: prepaid and savings. Prepaid plans allow one to purchase tuition credits, at today's rates, to be used in the future. Therefore, performance is based upon tuition inflation. Savings plans are different in that all growth is based upon market performance of the underlying investments, which typically consist of mutual funds. Most 529 savings plans offer a variety of age-based asset allocation options where the underlying investments become more conservative as the beneficiary gets closer to college-age. They also offer risk-based asset allocation options where the underlying investments maintain the same equity-to-fixed-income ratio regardless of the age of the beneficiary. Many savings plans also offer a stable value or guaranteed option designed to protect an investor's principal while providing for some investment growth, while others offer investments in certificates of deposit.

States or higher education institutions may sponsor prepaid plans. Savings plans may only be sponsored by states. Although states sponsor savings plans, record keeping and administrative services for many such savings plans are delegated to a mutual fund company or other financial services company.


All money grows federal and state income-tax free
All distributions for qualified higher education expenses are federal income tax free.
Many states also exempt withdrawals from state income-tax for qualified higher education expenses
Money can be used virtually everywhere – over 8,000 schools in the U.S. and over 800 foreign schools
Money can be used to pay for tuition, room, board, books, fees, supplies and required equipment
High maximum contribution limits
The maximum any one person can give per beneficiary is a total of $250,000.

The income tax advantages have contributed significantly to their popularity as a college savings tool.

Are Reverse Mortgages Right For You?

A reverse mortgage is a type of loan available to seniors (62 and over) that is used as a way of converting their home equity (the value of the home, minus the amount of any existing mortgages) into one or more cash payments while retaining ownership of the property (continuing to live there) and avoiding monthly payments. Repayment of the loan is deferred until the borrower is no longer living in the home.

In a typical mortgage, a homeowner pays a monthly amortized amount; after each payment, the owner has more equity in the house. After a certain amount of time (typically 30 years), the mortgage will be paid in full and the property released from the debt. In a reverse mortgage, the homeowner pays nothing each month and all interest on the debt is added to the lien on the property. If the owner receives monthly payments, then the debt on the house increases each month.

In the United States a reverse mortgage must be the first and only mortgage on the property (if there is an existing mortgage, it will be paid off with some of the proceeds from the reverse mortgage). In the United States, if the property increases in value (and as the person who owns the house ages and qualifies for more money), the reverse mortgage may be refinanced to borrow more against the increased equity.

To qualify for a reverse mortgage in the United States, the borrower must be at least 62. The borrower must pay off any existing mortgage(s) with the proceeds from the reverse mortgage and, if needed, additional personal funds. There are no minimum income or credit requirements, and for most reverse mortgages, the money can be used for any purpose.

About Annuities

There are two basic types of annuities you can buy: Fixed and Variable.

Fixed Annuities

Fixed annuities earn a guaranteed rate of interest for a specific time period, such as one, three or five years. Once the guarantee period is over, a new interest rate is set for the next period. This guarantee of both interest and principal makes fixed annuities somewhat similar to Certificates of Deposit purchased from a bank. Unlike a typical CD, however, the Federal Deposit Insurance Corporation does not back an annuity. Its security is directly related to the financial health of the insurance company that issues the annuity.

Variable Annuities

Variable annuities typically offer a range of investment or funding options. These funding options may include stocks, bonds and money market instruments. The return on variable annuities can go up or down. Your principal and the return you earn are not guaranteed. They depend on the performance of the underlying investment options. If the funding options you choose for your annuity perform well, they may exceed the inflation rate or fixed annuity returns. If they don't, you may lose not only prior earnings, but also some of your principal.

Some variable annuities offer, in addition to a range of investment options, a fixed account option that guarantees both principal and interest, much like a fixed annuity. This gives you the option of dividing your money between the low-risk fixed option and higher-risk vehicles such as stocks, all under the umbrella of just one annuity. Many variable annuities offer asset allocation programs to help you decide where to invest your assets based on your circumstances.

Variable annuities also allow you to transfer money from one account to another without triggering a taxable event. In other words, if you transfer money to a different funding option within your variable annuity, you will not have to pay taxes on any earnings you have made. Tax-free switching lets you re-allocate money to suit changing market conditions, without worrying about the taxes.

Fixed and Variable Annuity Expenses

Variable annuities usually have more features and higher fees than fixed annuities. With some fixed annuities, contract expenses such as maintenance and contract fees are taken into consideration when the company declares periodic interest rates or determines the payment amount.

Variable annuity fees are more complicated. They may include an annual contract charge that covers administrative expenses and surrender fees, as well as a mortality and expense risk charge. Variable annuities charge this latter fee to guarantee the death benefit, the availability of payout options and the level of expenses.

In addition, a variable annuity has fees for the management and operating expenses of the funding options in which your money is invested. These charges pay for everything from the fund manager's salary to the costs of printing the fund prospectus.

For a variable annuity, all fees and other important information will be explained in the prospectus that describes the variable annuity contract. The prospectus must be given to you when you are solicited to purchase a contract. Read it carefully before you invest or send money and be sure you understand exactly what your expenses will be.

Some Questions to Ask Before Buying

If you've decided that an annuity makes sense for you, here are a few key questions to ask yourself before signing up:

1. Have you done some comparison shopping and considered all of your options?

2. Does the rate on a fixed annuity look too good to be true? You want a competitive interest rate at renewal time. Once the bonus rate term expires, there is no guarantee going forward that renewal rates will be competitive.

3. What is the track record of the funding options offered in a variable annuity? Don't be swayed by last month's top performer. Look for strong returns over a three-to-five-year period or more.

4. Does a variable annuity offer multiple funding options in case you change your investment strategy a few years down the road? Look for a range of funds to diversify your retirement savings as your needs change.

Financial Designations and Titles

AAMS® Accredited Asset Management Specialist
AEP Accredited Estate Planner
AFC Accredited Financial Counselor
ATA Accredited Tax Advisor
ATP Accredited Tax Preparer
CAM Chartered Asset Manager
CEA Certified Estate Advisor
CEBS Certified Employee Benefit Specialist
CEP Certified Estate Planner
CFA Chartered Financial Analyst
CDFA Certified Divorce Financial Analyst
CEBS Certified Employee Benefit Specialist
CPM Chartered Portfolio Manager
CFC Certified Financial Consultant
CFM Certified Financial Manager
RFA Registered Financial Analyst Designate
CFP® Certified Financial Planner™
CFS Certified Funds Specialist.
ChFC Chartered Financial Consultant
CIC Certified Insurance Consultant
CIMA® Certified Investment Management Analyst
CIMC Certified Investment Management Consultant
CLU Chartered Life Underwriter
CMA Chartered Registered Market Analyst
CMFC Chartered Mutual Fund Counselor.
CPA Certified Public Accountant
CPCU Chartered Property Casualty Underwriter.
CPM Certified Portfolio Manager
CRPC® Chartered Retirement Planning Counselor
CRPS® Chartered Retirement Plans Specialist
CTEP Certified or Chartered Trust and Estate Planner
CTFA Certified Trust and Financial Adviser
CWM Chartered Wealth Manager
EA Enrolled Agent
ELS Estate Law Specialist
JD Juris Doctor
LLM Masters in Law
LUTCF   Life Underwriter Training Council Fellow
MFP Master Financial Professional
MBA Master of Business Administration
MFP Master Financial Professional
MS Master of Science
PFS Personal Financial Specialists
REBC Registered Employee Benefits Consultant
RFA Registered Financial Associate
RFC Registered Financial Consultant
RFG Registered Financial Gerontologist
RFP Registered Financial Planner
RHU Registered Health Underwriter
RIA Registered Investment Adviser


How to Check Out a Financial Planner

It is recommended that you check on a possible Financial Planner candidate. The following organizations provide consumers with relevant information on the disciplinary history of Financial Planners and financial service professionals:

checker • Certified Financial Planner Board of Standards (CFP® Board)

• National Association of Insurance Commissioners (NAIC)
   (816) 842-3600

• National Association of Securities Dealers Regulation (NASDR)
   (800) 289-9999

• Securities and Exchange Commission (SEC)
   (800) 732-0330

• National Fraud Exchange (NAFEX)
   (800) 822-0416 (fee involved)

• The International Association of Registered Financial Advisors (IARFA)
   (800) 532-9060


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