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Reaching Your Financial Fitness Goals by Karen West

It’s almost spring and the time to fulfill my New Year’s resolution to hire a financial planner has already come and is long gone.

Let’s face it. I’d rather visit my dentist than invite a stranger to delve into the untidy state of my personal savings, checking and business accounts. But the holiday financial hangover that still lingers is a constant reminder that I need to get my financial house in order.

If the anxiety over not making good on my New Year’s resolution isn’t enough, daily newspaper headlines remind me that it is more important than ever for women to take charge of their finances: Women on average live about five years longer than men do; women are among the top earners of Fortune 500 companies; and women represent nearly half of all investors with $100,000 or more in assets.

So I sought advice from financial planning experts for the best way to find and work with a qualified financial advisor.

Their No. 1 tip: Do your homework. Don’t just pick a name out of the Yellow Pages or even a trusted business directory. Treat finding a qualified financial planner the same way you would go about hiring a doctor or an attorney.

“We try to motivate women to take care of themselves no matter what their situation,” says Christine de Ruiter, an independent certified financial planner and co-owner of FS Financial Strategies, LLC in Edmonds. “In understanding money and investing, women are empowered to handle any situation that may come their way.’’

De Ruiter, whose practice specializes in financial planning for those going through divorce, says that as the baby boomers get older and the divorce rate continues to rise, more women are facing their finances and the investment world on their own.

“The death of a spouse, divorce, family tragedy happens all the time,” de Ruiter says. “None of us likes to think those things will happen to us, but they might. Being prepared for the worst is not a bad thing. It really is just being smart.”

She advises women going through divorce to educate themselves about their financial situation. “Do not guess, find out,’’ she says. “Get all the paperwork, all the records, and learn about the money you have and the prospects for how you will come out of the divorce. Know how much you need to live every month. Account for every penny.”

Whether you are going through a divorce, or just want to be more fiscally fit, a financial advisor is a good place to start.

“A good financial advisor can also be your coach and mentor,’’ says Seattle financial expert Marcia Brixey, whose new book, The Money Therapist: A Woman’s Guide to Creating a Healthy Financial Life, is being published by Seal Press in April.

Brixey, founder and president of Money Wi$e Women Educational Services, a nonprofit organization that hosts financial forums for women, says that just as a coach can teach you new skills, financial advisors can assist in identifying problem areas, developing strategies to reach your goals, and assist in setting priorities. In addition, they can save you time by researching investments and helping you make money with your investments.

The first step in finding a good financial advisor is to form a pool of potential candidates. Ask friends and colleagues for referrals, then interview each candidate to help determine which one best suits your needs, personality and communication style.

Most likely, you will be spending a considerable amount of time with this person, divulging your most intimate financial secrets — your annual income, your monthly bills, investments, shopping habits, how often you eat out, what you spend on vacations, luxuries, etc. — so make sure you are comfortable with your choice.

Brixey recommends checking to see if a planner’s record is tarnished by disciplinary actions or complaints. Groups that award credentials or state agencies that keep tabs on planners, such as the Certified Financial Planner Board of Standards, can help.

When calling references, find out how a planner performs in specific circumstances, such as during a financial crisis.

Don’t be afraid to ask tough questions. Brixey suggests asking questions up- front, preferably over the phone, so that when you sit down for a face-to-face, the potentially uncomfortable questions have already been answered.

“Remember, though some of these questions may sound a bit intimidating to ask, you are the one in charge,’’ Brixey says. “You are the one doing the hiring of someone to help manage your money. Take whatever steps necessary to assure your comfort in working with these advisors.”

She recommends finding out what financial products a planner sells and how much he or she earns for making a sale. Be wary of planners who push just one product, for example, one family mutual funds or one kind of insurance, as they may not give you the unbiased or comprehensive advice you need.

Another key tip is to find out what the financial planner’s credentials are. How long have they been in business? How long have they been certified?

“Many years of experience is a good thing to look for,’’ says de Ruiter. It is especially important because money and investing can be complicated. “More important than anything is to find someone who you understand, who makes you feel good about making decisions because they give you all the facts.”

De Ruiter, who also is past president of the Women Business Owners of Seattle, has been educating and encouraging women for the past 25 years to rise to a higher financial level. The first thing she tells her clients is that no questions are stupid. She advises women to seek out a financial planner they can understand and trust.

Developing a good relationship with your financial advisor is crucial, says de Ruiter. She and her partner, Robin Gruber, ask prospective clients to describe the perfect advisor/client relationship, what they have experienced previously, and what they would have preferred or why they are looking for someone new. “Our goal is to understand specifically what our clients expect from our relationship so that we can work hard to meet those expectations.”

Before hiring a financial planner, find out how they are paid. The three most common methods of payment are fee-only, fee-based, and commission-based. Fee-only planners don’t get commissions for the products they sell — fees are for the advice they give. Fee-based planners may receive commission on some products they sell, but most of their money comes from a fee you pay them. Commission-based planners are paid by the companies whose products they sell. “Look for someone who tells you right up front what everything costs,’’ says de Ruiter. “And someone who really asks a lot of questions about how you feel about risk.’’

Picking a financial advisor to a certain degree is like selecting a contractor, says Debbie Whitlock, owner of Sound Financial Partners in Seattle. “Cost is a factor. What appears to be the lowest or highest bidder isn’t necessarily the best value for an individual situation.”

Fee-only planners typically charge $100 to $250 an hour with an average price of about $175 per hour. Commissions can range between 3 and 5 percent on transactions. “The bigger the amount of money they invest, the lower the commission,’’ Whitlock says.

Payment plans usually depend on each individual case. For example, if you want someone to put together a financial plan, you might pay a set fee or hourly rate. Or if you want someone to manage a financial portfolio, you might pay on a commission basis. Whitlock urges consumers not to be afraid to discuss payment methods with their prospective financial planners. “There’s a reason there is a menu for consumers to choose from,’’ Whitlock says. “There is no absolute.”

She says it’s important to have a good understanding of the payment method and urges people to have the advisor explain why they have chosen a certain type of payment. “When they speak to you from the heart, that would indicate a good fit.’’

Karen West is a Bainbridge Island-based freelance writer.

©2008 Caliope Publishing Company