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Building Your Financial Team: Financial Planners

Farm Business Management Update, June 2000

By Alex White

Financial matters are becoming increasingly complex -- tax regulations are always changing, new investment vehicles are always being developed, estate planning laws are constantly being revised. It is easy to get confused and fall into the "One Step Forward, Two Steps Back Syndrome." Basically, this syndrome is where you make a financial move that is intended to benefit you in one way, but it ends up hurting you without your knowing it. An example is trying to save money by minimizing your annual income taxes -- while this may lower your tax bill, it also drastically reduces your future Social Security benefits and the amount you are eligible to invest in a qualified retirement plan.

One person would find it hard to keep up with all these changes and manage a business (or family) at the same time. That is why you should consider forming a financial advisory team. Let the experts keep you informed about the issues that affect you, so that you can make informed decisions that move you toward your financial goals.

So who should be on my financial advisory team? Start with a registered financial professional, such as a Certified Financial Planner (CFP), Registered Financial Planners (RFP) or Registered Investment Advisors (RIA). These planners are going to be the "quarterbacks" of your team. They will work with the other members of your financial team to make sure that you get the most current information. Most CFPs have training in five financial areas: Budgeting and Investing, Insurance Needs, Estate Planning, Retirement Planning, Tax Management. Thus, they are able to coordinate your financial moves to help you reach your goals. Because they are certified, they must participate in continuing education programs to remain current on financial matters, and they must follow a code of ethics to maintain a high level of professionalism.

Who are the other members of my financial team? Other possible members for your financial team include:

Accountant (CPA)     Attorney/Estate Planner
Insurance AgentInvestment Broker

Because these professionals specialize in certain areas, they are able to provide you with accurate, up-to-date, in-depth information. It is advisable to work with professionals who maintain a solid working relationship with other members of your financial team. For example, you will have a much stronger team if your financial planner, accountant, and attorney are able to work directly with each other.

How do I go about selecting a financial planner? Your financial planner is basically going to be your partner, so take care in selecting that person. He/she will be helping you manage your money, which is a serious responsibility. Interview at least three individuals before you commit to one. Some questions you should ask during the interview are

What to Expect from a Financial Planner

Your financial planner should be able to

Financial planners can be a great asset to you in reaching your financial goals. Think of them as your financial quarterback - leader of your advisory team. Think of them as your financial partner. Work with them to develop and implement a sound financial plan for you and your family.

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