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2 Always Be Careful When Choosing a Financial Planner

3 3 A is for Advice What kind do you need? Examples: Securities, Taxes, Estate Planning, Insurance Planners giving advice on securities for compensation must be registered with the State of Connecticut Dept. of Banking or the SEC

4 4 Licensing At A Glance June 30, 2010 Broker-dealers Registered 2,509 Broker-dealer Agents Registered 140,300 Investment Advisers Registered 496 SEC Registered Advisers Filing Notice 1,871 Investment Adviser Agents Registered 9,947

5 5 B is for Background Check Find out if the planner has any disciplinary history (lawsuits; regulatory actions) You can do an online check, or we will send or e-mail you the information We do not tip off the planner that you are asking for information

6 6 Check First FINRA BrokerCheck IAPD Connecticut Department of Banking Consumer Affairs (860) 240-8170 Securities Division (860) 240-8230 Toll-free 1-800-831-7225

7 7 C is for Conflicts of Interest Planners must tell you about any conflicts of interest that prevent them from giving you unbiased advice Example: Planner also works for a brokerage firm and gets commissions for securities product sales

8 8 D is for Disclosure By law, investment advisers must give you a disclosure document (“brochure”) describing their compensation, background, investment strategies, services and areas of expertise You should receive the brochure prior to, or when you sign the contract (you have 5 days to cancel the contract if you get the brochure at the time of contract signing)

9 9 E is for Experience How long has the planner been giving investment advice? Does the planner have experience in your area of interest? What is the planner’s work history?

10 10 F is for Fees There is no such thing as a free lunch (that mailed “dinner seminar invitation” notwithstanding!)

11 11 Fee Only Planners Only get paid for giving advice Does not matter if you follow the advice and buy a securities product Usually an hourly charge or by project

12 12 Commissions Paid to a securities product seller (like a broker-dealer) for buying or selling securities Decrease your total investment Planners can get commissions if they are also associated with a brokerage firm

13 13 Fees and Commissions Planner receives both Also called “fee based” or “fee offset” Watch out for other fees (initial consultation fee; follow-up review fee)

14 14 Wrap Fees You get a bundled set of investment services (brokerage; advice) for a set fee Planner may get a portion of the wrap fee you pay to the product sponsor

15 15 G is for Guaranteed Profits If your planner guarantees profits RUN TO THE NEAREST EXIT!

16 16 H is for High Return/No Risk If you planner tells you a product has no risk and high returns HE’S LYING

17 17 I is for Industry Designations Show that the planner is pursuing continuing education in her field But beware of titles suggesting a specialty in seniors’ affairs

18 18 Common Designations CFP (Certified Financial Planner) ChFC (Chartered Financial Consultant – insurance) PFS (Personal Financial Specialist – CPAs) CFA (Chartered Financial Analyst – securities)

19 19 R.I.A. Stands for Registered Investment Adviser Not an industry conferred designation Just because an adviser is registered with Connecticut (or with the SEC) does not mean that the government has given him its stamp of approval

20 20 J is for Jawboning Beware of planners who brag about their past performance Unscrupulous planners prey on your greed, reluctance to object, guilt, unwillingness to look dumb, etc.

21 21 K is for Know Your Client By law, investment advisers have a fiduciary duty to recommend products that align with your financial goals and risk tolerance

22 22 L is for Liquidity Tell your planner if you need ready access to funds (e.g. to pay bills) If you need to access your funds, long- term or locked up investments are not for you

23 23 M is for Multiple Hats Your planner must tell you if she is working for multiple firms (e.g. selling securities products for a brokerage firm) It is not uncommon for brokerage firms to set up shop in banks – looks aren’t everything!

24 24 N is for Number of Clients Ask the planner how many clients he has, and whether he only services high- income clients Beware if his only experience is managing his own securities portfolio

25 25 O is For One Size Fits All Plans Ask to see a sample of financial plans the financial planner has prepared Beware if the plans look the same – or recommend the same product(s)

26 26 P is For Personal Attention Ask the planner whether she (or an assistant) will be working with you If you’ll be working with an assistant, do the same background check and homework on the assistant that you’d do on the financial planner

27 27 Q is for Question Ask the planner as many questions as you want – after all, he’ll be working for YOU

28 28 R is for Risk Assessment Before you meet with the planner, think about how much investment risk you are able to bear

29 29 S is for Schooling (and Services) Did the planner graduate from the Wharton School of Business – or the local academy of hair design? Nail down the planner on precisely what services he will provide

30 30 T is for Take Your Time You don’t have to follow the planner’s recommendations right away If the planner pressures you to buy a particular product, be wary.

31 31 U is for Understand the Strategies Beware of the “Einstein Effect” – the planner telling you that the investment strategy is so complicated, only he understands it

32 32 V is for Variety Interview several planners before deciding on one

33 33 W is for Writing (Get it in) Ask for a copy of the adviser’s brochure – and read it beforehand Review the advisory contract before you sign it

34 34 X is for X Marks the Spot Don’t give the adviser discretion – the ability to trade securities for you without your permission – without granting that authority in writing and thinking it through

35 35 Y is for You Are in Control Make the Adviser WORK For Your Business

36 36 Z is for Zero In on Your Finances Familiarize yourself with your financial plan Read your account statements carefully Keep up-to-speed on finance by reading newspapers and periodicals


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