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Sunday, April 22, 2012

Insider Secrets Financial Planners Pray You Never Find Out

 Financial planners CANNOT pick winning investments to beat the market, build wealth without risk or let you in on a deal that looks to good to be true. Advisers make money either by getting a commission to sell you a financial product or charge an asset based fee which is usually 1% annually of your assets So if your assets grow, so does their fee. But there are still conflicts since it encourages the fee based planner to capture as much of your  money as he can. That's why  few fee based planners encourage you to pay off your mortgage. They also like to put you in products that pay them automatically each quarter. In fact, few will tell you about a higher paying CD since banks don't pay financial planners.   Obviously, a planner who works on commission  would want to sell you products that yield the highest commissions. Also, if you don't have more than $100,000 to invest, commission based planners are the only ones who might take your business. But the conflict of interest is particularly stark among commission only planners. They usually sell load-carrying mutual funds, hedge funds,and  private investments ranging from insurance to annuities to universal life. Another compensation model is those planners who get paid by the hour. They usually charge from $180 to $240 and hour and can be found at www.GarrettPlanningNetwork.Com

                                                               How They Sell You

Planners know that the quickest way to your money is your emotions.  In one hour they'll try to get you so wound up that you might sign over your entire fortune. Many follow a  multi-step system that gets you to talk about your values and your goals.  They'll say things like, "describe your perfect day." Then they'll tell you how much money you'll need to invest  for a string of perfect days. Or they might say they can get you to your dreams of spending more time with your grand kids if you let them handle your money right now. But most of  them know that  if you walk out of the office without signing , you may realize how manipulative the session was and never return. And once you sign and buy some product, it make take you years to get your money back without penalties. So never sign any document on your first meeting with a planner even if he or she tells you that you can still back out. Also, stay clear of so called free"educational dinners" and ads that boast wealth without risk and high guaranteed returns. They are just bait and switch tactics to get you into the office.You should also remember that anyone can fill an office with prestigious-looking credentials  and call themselves  a "financial planner".   On the other hand, a good financial planner can help you define your financial goals, help you build a low cost diversified portfolio,and make sure you have the lowest cost  insurance coverage for your needs. They can also help make the right moves with Social Security and your pension, reduce your taxes and pass assets to your heirs.

                         How To Get The Best Advice From Your Financial Planner 

If you are going to meet with a planner, first check his or her professional credentials online to see if they have the serious, hard to get designations like CFP ( Certified Financial Planner ) or CFA ( chartered financial analyst. ) Second, go to www.FINRA.Org and http://www.sec.gov/ to see if there have been any regulatory actions taken against your planner. Also, see if he or she is registered with your state securities department at www.NASAA.Org and has any history of complaints. If your planner sells insurance products and annuities, check with your state's division of insurance. At your first meeting, never commit to handing over any money. Thank about it and discuss it with others. If your planner pressures you into buying right away, walk away. When your planner recommends an investment, ask if there's a penalty for getting your money back. If so, ask how much it is and how long the penalty period lasts. Penalties are the best indicator that your planner is getting a big commission. You should also ask your planner to put down in writing why he or she thinks an investment is suitable for you and the total cost you'll be paying. Make sure its under 1% annually. If the planner refuses your requests for  any reason, move on. Next, make sure you completely understand any recommended investment and how it fits your objectives. To test your understanding, explain it to someone you trust. If that person doesn't get it, then you should avoid it. To play it safe, watch for warning signals. Does the product seem too good to be true? ( i.e. high returns-risk free )  Are you being asked to sign a document  saying you read hundreds of pages and understand what you read? Is the planner building trust from affiliations such as belonging to the same club, church or traveling in the same social circles? ( i.e. Bernie Madoff ) Is the planner saying you must sign in the next 24 or 48 hours? And last, don't put your faith in references. Even the worst financial planner on earth can come up with 3 people who like him or her.

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