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Financial Planning

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This collection of personal financial information is directed to works for a living. Everyone needs to know more about financial matters.  The SOURCE for much of this information is the GSA Consumer Information Catalog published by the Federal Citizen Information Center.

 

Image of a character holding a flashlight shining on dollar signs

There's a Lot to Learn about Money
YOU CAN TAKE CHARGE OF YOUR FINANCIAL FUTURE
Federal Reserve System

"No matter who you are, making informed decisions about what to do with your money will help build a more stable financial future for you and your family." - Alan Greenspan

Take Charge

It's possible to meet your financial goals - whether your income is small, medium or large.

By looking for good information on managing your finances, along with choosing to budget, save and use credit wisely, you can:

Buy a home.

Send your child to college.

Start a business.

Pay off debts.

Put money away for a rainy day.

Save for retirement.

No matter who you are, you can take charge of your financial future. Start today!

To get you started, here are some simple tips.

Set Goals

Most people who have money didn't get it overnight. They set goals and worked hard to reach them.

TRY THIS: Write down your short-term and long-term goals. An example of a short-term goal is saving up for holiday gifts; a long-term goal is saving for a home.

Set due dates for reaching your goals.

Be realistic.

Be flexible. (It's OK to adjust your goals and strategies.)

Go back and look at your goals after six months to check your progress.

Develop a Budget

Image of a character writing in a notebookFind out where your money is going. Unless you're tracking your money, it's probably not going where you really want it to.

TRY THIS: Write down your total monthly take-home pay. Then list your monthly expenses. At the end of the month, subtract those expenses from your total pay.

Look for places to save.

Use this information to set a monthly budget that includes saving.

Review how things are going each month.

TIP: Carry a small notebook. Write down everything you spend. Include small things like candy bars.

Start Saving

Image of a character putting a coin in a piggy bankSmall amounts of money saved regularly add up fast. Compound interest, which lets you earn interest on interest, will make your savings grow even faster.

TRY THIS: Open a savings account. Have part of your paycheck deposited directly into your savings account every month.

Shop for the best interest rates.

Understand all fees and charges.

Take advantage of your company's 401 (k) or invest in an IRA (individual retirement account).

As your income rises, increase the percentage you save.

Know that the greater the potential profit on an investment, the greater the potential risk of losing your money.

TIP: The earlier in life you start saving, the more you'll have later.

Compound Interest Advantage Chart

Manage Credit Wisely

Borrowing can help you meet your long-term goals for an education, car or home. But borrowing for day-to-day needs and wants gets many people into financial trouble.

TRY THIS: Before using your credit card, getting a payday loan, renting-to-own or borrowing against your home's equity, ask yourself if you really need to borrow the money.

Avoid spur-of-the-moment purchases.

Set a monthly limit on credit card charges.

Pay more than the minimum on your credit card bill.

TIP: THE MINIMUM PAYMENT TRAP

It would take 61 years to pay off a $5,000 credit card balance if you make only the minimum monthly payment. You would pay almost $16,000* in interest!

* Assuming a 14% interest rate and minimum payment of 1.5% of the outstanding balance.

Protect Your Credit Rating

Lenders use credit reports to decide whether to loan money. Insurance companies, landlords and employers also check credit reports. A report that shows defaults or late payments- even 30 days late-can mean not getting a loan or paying a higher interest rate.

TRY THIS: Find out your credit rating. Call a credit bureau for a copy of your report.

Pay all bills on time.

If you're having trouble paying bills, get advice from a reputable nonprofit organization before you become delinquent.

Check your credit report every year.

Alert the credit bureau if you see errors in your report.

TIP: CREDIT BUREAUS
Equifax 1-800-685-1111
Experian 1-888-397-3742
Trans Union 1-800-888-4213

Get the Best Deal

When you borrow money, you have a right and a responsibility to know all the loan's terms and conditions. Ask questions and compare interest rates and fees. Know what's at stake if you don't make your payments.

TRY THIS: Before you borrow money, ask these questions:

What is the interest rate?

What are all the fees?

How much will I have paid in interest when the loan is paid off?

Can I pay it off early without penalty?

AND THIS: Shop around and compare. Don't get taken.

Question an offer that makes borrowing sound too good to be true.

Always read and understand the fine print.

Seek help if you need it.

TIP: SAVE MONEY WITH THE RIGHT LOAN

       Get the Lowest Rate

$15,000 Car Loan for 5 Years

Lender

Interest rate

Total interest

Pixley Bank

6.5%

$ 2,609.53

ABC Car loan

7.5%

$ 3,034.15

XYZ Finance Company

8.75%

$ 3,573.51

       Choose the Shortest Term

$15,000 Car Loan at 10 Percent Interest

 

3-year

4-year

5-year

Number of payments

36

48

60

Payment

$ 484

$ 380

$ 318

Total paid

$ 17,424

$ 18,261

$ 19,122

Interest saved

$ 1,698

$ 861

$0

 

Take Control

Getting the right information can help you gain control of your finances.

TRY THIS: When you need information, make sure the source is reliable.

Know who you are dealing with.

Make sure the resource is credible and properly trained, accredited or certified.

Ask for references.

Understand any fees or charges.

Make sure they're not trying to sell a product or service.

Avoid resources that charge excessive fees.

Ask questions.

Learn More About Money

Image of a character reading a book with a dollar sign on the coverThere's a lot to learn about money, and there's plenty of free information available. The Federal Reserve education web site, www.federalreserveeducation.org, offers personal financial education information and links to many useful resources.

TRY THIS: Look for organizations in your community that can help you learn more about setting financial goals, budgeting, saving, using credit wisely and getting the best deal. Here are some possibilities:

Nonprofit credit counseling service

Library

Community college

Bank or credit union

Nonprofit community development corporation

Nonprofit housing organization

Religious organization

Senior citizen center

Employee assistance program

Cooperative extension service

Image of a character holding a torch next to the Federal Reserve Seal

 


10 Questions to Ask When Choosing a Financial Planner

You may be considering help from a financial planner for a number of reasons, whether it's deciding to buy a new home, planning for retirement or your children's education, or simply not having the time or expertise to get your finances in order. Whatever your needs, working with a financial planner can be a helpful step in securing your financial future.

The questions in this brochure will help you interview and evaluate several financial planners to find the one that's right for you. You will want to select a competent, qualified professional with whom you feel comfortable, one whose business style suits your financial planning needs. An interview checklist has been included for your convenience.

10 Questions

 

Checklist for Interviewing a Financial Planner

 

To Check the Disciplinary History of a Financial Planner or Adviser

To Find a Financial Planner in Your Area

 

Learn About Financial Planning Online

 

About CFP Board

 

 

 

 

10 Questions

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1. What experience do you have?
Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has experience counseling individuals on their financial needs.

2. What are your qualifications?
The term "financial planner" is used by many financial professionals. Ask the planner what qualifies him to offer financial planning advice and whether he is recognized as a CERTIFIED FINANCIAL PLANNER™ professional or CFP® practitioner, a Certified Public Accountant/ Personal Financial Specialist (CPA/PFS), or a Chartered Financial Consultant (ChFC). Look for a planner who has proven experience in financial planning topics such as insurance, tax planning, investments, estate planning or retirement planning. Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation or certification, check on his background with CFP Board or other relevant professional organizations.

3. What services do you offer?
The services a financial planner offers depend on a number of factors including credentials, licenses and areas of expertise. Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advice unless registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or on tax matters.

4. What is your approach to financial planning?
Ask the financial planner about the type of clients and financial situations she typically likes to work with. Some planners prefer to develop one plan by bringing together allof your financial goals. Others provide advice on specific areas, as needed. Make sure the planner's viewpoint on investing is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services. Find out if the planner will carry out the financial recommendations developed for you or refer you to others who will do so.

5. Will you be the only person working with me?
The financial planner may work with you himself or have others in the office assist him. You may want to meet everyone who will be working with you. If the planner works with professionals outside his own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on their backgrounds.

6. How will I pay for your services?
As part of your financial planning agreement, the financial planner should clearly tell you in writing how she will be paid for the services to be provided.

Planners can be paid in several ways:

A salary paid by the company for which the planner works. The planner's employer receives payment from you or others, either in fees or commissions, in order to pay the planner's salary.

Fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income.

Commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product.

A combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. In addition, some planners may offset some portion of the fees you pay if they receive commissions for carrying out their recommendations.

7. How much do you typically charge?
While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner's hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

8. Could anyone besides me benefit from your recommendations?
Some business relationships or partnerships that a planner has could affect her professional judgment while working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies, securities or mutual funds have a business relationship with the companies that provide these financial products. The planner may also have relationships or partnerships that should be disclosed to you, such as business she receives for referring you to an insurance agent, accountant or attorney for implementation of planning suggestions.

9. Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?
Several government and professional regulatory organizations, such as the National Association of Securities Dealers (NASD), your state insurance and securities departments, and CFP Board keep records on the disciplinary history of financial planners and advisers. Ask what organizations the planner is regulated by and contact these groups to conduct a background check. (See listing at right.) All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies, or who are associated with a company that is registered as an investment adviser, must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form.

10. Can I have it in writing?
Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.

Checklist for Interviewing a Financial Planner

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Planner's Name: __________________________________________________

Company: _______________________________________________________

Address: ________________________________________________________

Phone: __________________________________________________________

Date: ___________________________________________________________

1. Do you have experience in providing advice on the topics below? If yes, indicate the number of years.

Retirement planning

Investment planning

Tax planning

Estate planning

Insurance planning

Integrated planning

Other

2. What are your areas of specialization?

What qualifies you in this field?

3. a. How long have you been offering financial planning advice to clients?

Less than one year

One to four years

Five to 10 years

More than 10 years

b. How many clients do you currently have?

Less than 10 clients

10 to 39

40 to 79

80 +

4. Briefly describe your work history.

5. What are your educational qualifications?
     Give area of study.

Certificate

Undergraduate degree

Advanced degree

Other

6. What financial planning designation(s) or certification(s) do you hold?

Certified Financial Planner™ or CFP®

Certified Public Accountant/Personal Financial Specialist (CPA/PFS)

Chartered Financial Consultant (ChFC)

Other

7. What financial planning continuing education requirements do you fulfill?

8.What licenses do you hold?

Insurance

Securities

CPA

J.D.

Other

9. a. Are you personally licensed or registered as an Investment Adviser with the:

State(s)?

Federal Government?

If no, why not?

b. Is your firm licensed or registered as an Investment Adviser with the:

State(s)?

Federal Government?

If no, why not?

c. Will you provide me with your disclosure document Form ADV Part II or its state equivalent?

Yes

No

If no, why not?

10. What services do you offer?

11. Describe your approach to financial planning.

12. a. Who will work with me?

Planner

Associate(s)

b. Will the same individual(s) review my financial situation?

Yes

No

If no, who will?

13. How are you paid for your services?

Fee

Commission

Fee and commission

Salary

Other

14. What do you typically charge?

a. Fee:

Hourly rate $ _________

Flat fee (range) $ _________ to $ _________

Percentage of assets under management _________ percent

b. Commission:

What is the approximate percentage of the investment or premium you receive on:

stocks and bonds _________

mutual funds _________

annuities _________

insurance products _________

other _________

15. a. Do you have a business affiliation with any company whose products or services you are recommending?

Yes

No

Explain:

b. Is any of your compensation based on selling products?

Yes

No

Explain:

c. Do professionals and sales agents to whom you may refer me send business, fees or any other benefits to you?

Yes

No

Explain:

d. Do you have an affiliation with a broker/dealer?

Yes

No

e. Are you an owner of, or connected with, any other company whose services or products I will use?

Yes

No

Explain:

16. Do you provide a written client engagement agreement?

Yes

No

If no, why not?

To Check the Disciplinary History of a Financial Planner or Adviser

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Certified Financial Planner Board of Standards, Inc.
888-237-6275 - www.CFP.net/search

North American Securities Administrators Association
202-737-0900 - www.nasaa.org

National Association of Insurance Commissioners
816-842-3600 - www.naic.org

National Association of Securities
Dealers Regulation
800-289-9999 - www.nasdr.com

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

Securities and Exchange Commission
202-942-7040 - www.sec.gov

To Find a Financial Planner in Your Area

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Financial Planning Association
800-282-7526 - www.fpanet.org

National Association of Personal Financial Advisors
888-333-6659 - www.napfa.org

American Institute of Certified Public Accountants/Personal Financial Planning Division
888-999-9256 - www.aicpa.org

Society of Financial Service Professionals
888-243-2258 - www.financialpro.org

Learn About Financial Planning Online

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CFP Board's Web site, www.CFP.net/learn, is a comprehensive resource for financial planning, offering useful information for visitors at every stage of the financial planning learning curve. Interactive tools provide help for your personal situation, including changing jobs, managing debt, planning your retirement and more. Join the eNewsletter for updates and check back regularly to participate in polls and quizzes.

Your Rights as a Financial Planning Client

Working with a financial planner can be an extremely rewarding and valuable experience for you and your family. If you've decided to work with a financial planner, it's important to understand your rights in this professional relationship.

This brochure describes the kind of treatment you deserve from your financial planner and helps you recognize when he or she is putting your interests and needs first. You can take an active role in shaping your financial future when you know your rights and what to expect from your financial planner.

You have the right to . . . .

 

Summary of Your Rights as a Financial Planning Client

 

To Find a Financial Planner in Your Area

 

To Lodge A Complaint Against a Planner or Adviser

 

Learn About Financial Planning Online

 

About CFP Board

 

 

 

 

You have the right to . . . .

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You have the right to a planner who has integrity
Trust between you and your financial planner is central to a successful financial planning relationship. You rely on your planner's honesty, professionalism and abilities to achieve your financial and life goals. When you know that your planner takes his or her professional obligations seriously, and places principles over personal gain, you can develop the type of partnership that is crucial to the success of any professional relationship.

You have the right to objective advice
Your needs should be at the heart of all recommendations made by your financial planner. Your planner should use his or her experience and judgment to carefully consider your situation, and provide you with advice that best meets your goals. Sometimes, this objectivity may require the planner to explain that your goals are unrealistic given your current resources and financial commitments. Your planner may then suggest alternative goals or priorities.

You have the right to a planner who is competent
You have the right to expect your planner to demonstrate an appropriate level of knowledge to offer financial planning advice, such as attainment of the Certified Financial PlannerTM certification or Chartered Financial Consultant or Certified Public Accountant-Personal Financial Specialist designations. Your planner should complete continuing education courses as part of his or her ongoing commitment to competency.

You have the right to be treated fairly
Your planner should treat you the same way he or she would like to be treated in a professional relationship. This involves clearly stating what services will be provided and at what price. The planner should also explain the risks associated with his or her financial recommendations and any potential conflicts of interest. For example, does the planner gain personally or financially from your purchase of a particular product or from the outcome of a suggested strategy?

You have the right to privacy
To get the best results from your financial planning relationship, you need to divulge relevant personal and financial information to your financial planner on a regular basis. Your planner should keep this information in confidence, only sharing it with others to conduct business on your behalf, at your consent, or when ordered to do so by the courts.

You have the right to a planner who is professional
Your planner should not provide investment advice or stock brokerage services unless he or she is properly qualified and licensed to do so, as required by state or federal law. If your situation requires expertise that your planner does not possess, he or she should suggest other professionals who may assist you.

You have the right to a planner who is diligent
Your financial planner should discuss your goals and objectives with you and explain what you can expect from the relationship before engaging you as a client. Once the planner has determined that he or she (or his or her staff and/or network of related professionals) can assist you and has gathered sufficient information, the planner should make - and, if appropriate, implement - recommendations that are suitable for you. A diligent planner reasonably investigates the products or services he or she recommends. A diligent planner also closely supervises any staff working with you.

Summary of Your Rights as a Financial Planning Client

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Use the following checklist to determine your level of comfort with your existing financial planning relationship. If you are not satisfied with your situation, assert your rights by talking to your planner about your concerns. A competent, ethical planner will seek to understand and meet your needs and will explain the reasons behind his or her decisions and actions.

_____ My planner is diligent in carrying out his or her activities.
_____ My planner responds to my phone calls or requests promptly.
_____ Recommendations are appropriate for my situation.
_____ I understand what I'm being charged and why.
_____ I understand and accept my planner's potential conflicts of interest.
_____ My interests drive the decisions being made.
_____ I'm involved in decisions at the appropriate time.
_____ I do not feel pressured to make certain decisions.
_____ I get adequate information to make good decisions.
_____ My planner investigates the products he or she recommends.
_____ I get the service or products I pay for.
_____ My planner presents his or her qualifications or abilities honestly.
_____ The staff who works with me is properly supervised.
_____ My information is kept confidential.

To Find a Financial Planner in Your Area

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According to Certified Financial Planner Board of Standards Inc. (CFP Board) research, more than 40 percent of Americans feel that they are not in control of their finances. If you would like to better manage your financial situation, a professional financial planner may be able to help you. Knowing how a planner should work with you, and how you will be treated as a financial planning client, will put you in the driver's seat when it comes to taking control of your financial future.

Financial Planning Association
800-282-7526 - www.fpanet.org

National Association of Personal Financial Advisors
888-333-6659 - www.napfa.org

American Institute of Certified Public Accountants/Personal Financial Planning Division
888-999-9256 - www.aicpa.org

Society of Financial Service Professionals
888-243-2258 - www.financialpro.org

To Lodge A Complaint Against a Planner or Adviser

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If you are currently working with a financial planner and are unsatisfied with the relationship, talk to the planner about your concerns. If you cannot mutually agree on how to improve the situation, you may want to find another planner. To lodge a complaint against a planner, contact one or more of the organizations listed, depending on which licenses, certifications or designations the planner holds.

Certified Financial Planner Board of Standards, Inc.
888-237-6275 - www.CFP.net/complaint

North American Securities Administrators Association
202-737-0900 - www.nasaa.org

National Association of Insurance Commissioners
816-842-3600 - www.naic.org

National Association of Securities Dealers Regulation
800-289-9999 - www.nasdr.com

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

Securities and Exchange Commission
202-942-7040 - www.sec.gov

Learn About Financial Planning Online

| back to top

CFP Board's Web site, www.CFP.net/learn, is a comprehensive resource for financial planning, offering useful information for visitors at every stage of the financial planning learning curve. Interactive tools provide help for your personal situation, including changing jobs, managing debt, planning your retirement and more. Join the eNewsletter for updates and check back regularly to participate in polls and quizzes.

About CFP Board

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The information in this brochure is provided as a public service by Certified Financial Planner Board of Standards Inc. (CFP Board). A nonprofit, professional regulatory organization, CFP Board fosters professional standards in personal financial planning so that the public values, has access to and benefits from competent and ethical financial planning.

The U.S. Securities and Exchange Commission's Office of Investor Education and Assistance has reviewed this publication. The SEC does not endorse the commercial activities, products or members of this or any other private organization.

It's your future. Plan it!SM is a service mark owned by Certified Financial Planner Board of Standards Inc.
This publication may be reprinted for educational and nonprofit purposes only.


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Rotating images.Welcome to mymoney.gov, the Federal Government's website dedicated to helping Americans understand more about their money – how to save it, invest it, and manage it to meet your personal goals.

Every day, consumers spend money – or do something that involves money - whether it is balancing a checking account; shopping for a mortgage or auto loan; researching ways to pay for a college education; checking credit card statements; putting money away for retirement; understanding a credit report; or simply deciding whether to pay cash or charge a purchase.… the list goes on and on.


You can use the resources on this site to learn how to do these things and manage your money better – and we hope you'll share what you learn with others. This site will grow over time with more information on lots of different topics – so visit often!

To order a sample of some of the financial publications featured on this website, you may send for a free "My Money" tool kit. It has information to help you choose and use credit cards, get out of debt, protect your credit record, understand your Social Security benefits, insure your bank deposits, and start a savings and investing plan. Just click on the Free "My Money" tool kit link below, fill out the order form, and we'll be glad to send your "My Money" tool kit. You should receive your order within three to four weeks.
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