19 Dec The gift of a financial planner

Q. I’ve been trying to get my son and his wife to start working with a financial planner instead of using me – I take care of my own money but I know I won’t be around forever, and I think they need help. They say no. What do you think about getting them a session as a Christmas present? How much would that cost?
— Kris Kringle

A. It’s admirable that you’ve been helping your son and daughter-in-law with their financial matters, and you’re wise at the same time to recommend that they work with an independent financial planner longer-term.

If the kids are adamant that they don’t need help and don’t want to work with a planner, the old adage about leading a horse to water may apply, said Gene McGovern, a certified financial planner with McGovern Financial Advisors in Westfield.

But, he said, the gift of an initial session just might provide some motivation for them to explore the possibility.

“From the planner’s perspective, the prospective clients would be your children, not you, so any payments to the planner should be received pursuant to an agreement signed with your son and daughter-in-law,” McGovern said. “For that reason, you should seek to set up an initial meeting that’s free of any cost or obligation, which many financial planners are happy to do.”

If the children eventually decide to work with the planner, you could offer to reimburse them for a portion of the cost, he said. In effect, you’d be giving them an incentive to work with a planner, which is your ultimate goal.

Financial planning costs vary, not only among practitioners but also according to the scope of services being provided and the way that the planner is compensated.

For example, McGovern said, do the clients need a comprehensive financial plan, covering areas such as cash flow and budgeting, investments, insurance, tax planning, and college planning, or are they looking for help in a few specific areas? Are they looking for ongoing help with portfolio management, or simply looking for a recommended asset allocation strategy?

Another basic question to consider is the type of financial planner to whom you want to refer them, McGovern said.

For example, a certified financial planner, also known as a CFP, must follow a strict code of ethics and has a fiduciary duty to clients, so it’s always a good idea to look for that designation, McGovern said.

“Planners also differ in whether they are fee-only, meaning that they accept no sales-related compensation such as commissions, or whether they also receive commissions on sales of investments or insurance products,” he said.

Information on how a planner is compensated, as well as typical fees charged and services offered, should be available on the firm’s website in a document known as the firm brochure, he said.

“You can also look for the same information in Form ADV, which is the disclosure document that investment advisors file each year with the SEC and is available on the SEC’s website,”  he said.

Form ADV will also list any potential conflicts of interest the firm has with clients and any disciplinary actions taken against the firm or its advisors, he said.

Ultimately, of course, your children must decide whether they want to work with a planner.

“A referral to a planner for a free, no-obligation initial meeting, with a reimbursement offer from you to the kids as an incentive to work with that – or a different – planner, could make for an excellent stocking stuffer on Christmas Day,” McGovern said.

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