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SMART MONEY: Ten questions to ask a financial adviser

In these complicated times, we’re being encouraged (if not hounded) to save money, to invest and plan our own retirements. Many of us turn to professional advisors for guidance.

These may be people at large brokerage firms such as Merrill Lynch and Edward Jones or who work for an insurance company, a bank or an online brokerage firm. Some advisors run their own investment business with a roster of private clients.

If you are looking for professional help, keep in mind that no one investment plan fits everyone. You may be recently divorced or widowed. You may be under 50 with time left to get on top of retirement savings. You may be near retirement or even in retirement. Or you may be female and need different approach to retirement. Strategies change with all these circumstances.

by: CONTRIBUTED PHOTO - Julia AndersonIf indeed you need the help of a professional don't just take the casual recommendation of friends. That’s how scammer Bernie Madoff built his $50 billion Ponzi scheme. Instead, take these two steps: Educate yourself in the basics of money management and secondly, interview several financial planners using a list of tough questions.

Do your homework (put in the time) to learn about saving and investing. Visit online Web sites sponsored by such groups as the National Association of Insurance and Financial Advisors or the American Institute of CPAs. Or tap into personal finance columnists at the Wall Street Journal and Forbes

The Institute of Financial Literacy can help with "financial goal" lists and interactive net worth analysis. For women, WIFE.org is helpful with tons of money advice. As well talk with informed and trusted friends about how they are saving, investing and planning for the future.

10 questions for planners

Before hiring someone to professionally manage your money, interview several candidates. Approach this project as if your life depends on it because it does. What you need to know before making a selection:

1. How do you get paid?

Financial advisers have to make a living like everybody else but it is not always clear how that happens. Do they earn a commission on products they sell you such as annuities or certain other investments? Or do they charge a retainer based on a percentage of your portfolio or in some other way? Get clear answers.

2. What’s your background, experience?

What training do they have? What certifications have they received? How long have they been in the business and where? How old are they? These factors will affect how they might manage your money.

3. What’s the strength of the company you work for?

Are they working with a big company or bank with a long history of solid management? You want to see a strong track record, healthy balance sheets with management oversight and reporting.

4. What do your clients say about you?

Ask to talk to few clients for their likes about your candidate and areas where there could be improvement.

5. What are your checks and balances?

Who checks up on their work? Will you receive a monthly report on your investment portfolio? How often will this person meet with you? What’s their accountability?

6. Can you put your financial planning proposals in writing?

Any good investment advisor should be happy to put a saving and investment strategy in writing in detail and in language that you understand.

7. What are the potential pitfalls of the investment products you are offering?

With every investment there are risks and rewards. Usually if the rewards are exceptional, so are the risks. If something feels too good to be true, it is.

8. What do other professionals say about you?

Ask for references from others in the business who know and work with the person you are considering as a financial advisor.

9. Ask yourself: What’s your gut-level comfort with this adviser?

Do you feel patronized when they talk with you? When you ask questions are you getting clear answers? Are they doing all the talking and not much listening?

10. Ask yourself: When you meet with your advisor, do you come away feeling good about what you’ve learned, where you’re headed?

If you take the time to interview several people using these questions, you will be much more successful in choosing a person you can trust and with whom you will have a positive long-term relationship.

Julia Anderson is the founder and ongoing contributor at www.sixtyandsingle.com where she writes for women about money, investing and retirement planning. To reach her, send email to This email address is being protected from spambots. You need JavaScript enabled to view it. .