Quiz | January 2010

Do You Need a Financial Planner? - Quiz

Good leaders know when to delegate, and when to seek expert opinions. So as the leader of your personal finances, you shouldn't be afraid to consult a financial planner--when appropriate.

Here are ten scenarios to help you determine when it makes sense to hire a professional to provide investment and financial advice. Planners typically charge a flat fee of $100 to $500 an hour for their advice. If they also manage your money, they’ll typically charge you a percentage of assets, around 1% to 2%, less for larger accounts. Take our quiz to learn the right times to seek support along your financial journey. Good luck!

Quiz

Do You Need a Financial Planner? - Quiz

Question 1 of 10

You need help tracking your monthly finances. Should you consult a financial planner?

A. Yes
B. No

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Do You Need a Financial Planner? - Quiz

Question 1 of 10

You need help tracking your monthly finances. Should you consult a financial planner?

You're right! B. No is correct.

Sorry, wrong! is incorrect.

The right answer is B. No.

A planner's job is to solve tax or investment problems, help you deal with your estate and coach you toward long-term goals. If you simply want to get more organized, download a software program such as Quicken. Or try an online money tracking Web site such as Mint.com.

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Do You Need a Financial Planner? - Quiz

Question 2 of 10

You’re 54 and your goal is to have $1.2 million in your portfolio by the time you retire at age 62. So far you have $450,000 socked away. Should you consult a financial planner?

A. Yes
B. No

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Do You Need a Financial Planner? - Quiz

Question 2 of 10

You’re 54 and your goal is to have $1.2 million in your portfolio by the time you retire at age 62. So far you have $450,000 socked away. Should you consult a financial planner?

You're right! A. Yes is correct.

Sorry, wrong! is incorrect.

The right answer is A. Yes.

A planner may not be able to help you achieve a 13% annualized return, which is what it would take to reach your objective without any additional savings. That’s awfully ambitious. But good, ethical planners will help you to set realistic expectations (they can’t guarantee results). You’ll fill out a questionnaire before your first meeting, which should be free and informal. Part of the survey will discuss your investment style and your expectations.

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Do You Need a Financial Planner? - Quiz

Question 3 of 10

Your financial adviser is your Dad’s longtime favorite. But you want your own investment strategy. Should you consult another planner?

A. Yes
B. No
C. It depends

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Do You Need a Financial Planner? - Quiz

Question 3 of 10

Your financial adviser is your Dad’s longtime favorite. But you want your own investment strategy. Should you consult another planner?

You're right! C. It depends is correct.

Sorry, wrong! is incorrect.

The right answer is C. It depends.

Perhaps all you need is a sit down with your father’s favorite to assert your individual wishes and customize your portfolio. But if you are looking for a fresh perspective, you may find a consultation with a new adviser worthwhile, even at a cost of $500 to $1,000. You can then decide which adviser is right for you.

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Do You Need a Financial Planner? - Quiz

Question 4 of 10

You don't contribute regularly to your 401(k) at work. You hear that stocks are the best investment for the long term, but the market looks risky to you. Should you consult a financial planner?

A. Yes
B. No

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Do You Need a Financial Planner? - Quiz

Question 4 of 10

You don't contribute regularly to your 401(k) at work. You hear that stocks are the best investment for the long term, but the market looks risky to you. Should you consult a financial planner?

You're right! B. No is correct.

Sorry, wrong! is incorrect.

The right answer is B. No.

At least not as a first step. Save the $1,000 you might have spent on a planner to hear advice you probably know already: Leaving your money on the sidelines is the surest way to lose in the long run. Arrange for a fixed sum to go into your retirement plan every month. Your HR department can help you take care of this in no time at all. If you feel clueless about HOW to invest that money, however, you may find it helpful to get advice -- and, perhaps, some reassurance -- form a planner.

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Do You Need a Financial Planner? - Quiz

Question 5 of 10

You have multiple retirement accounts invested in dozens of different funds. Your spouse has another set of accounts. You both contribute regularly. But you lost a considerable amount during the 2007-09 bear market. Should you consult a financial planner?

A. Yes
B. No

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Do You Need a Financial Planner? - Quiz

Question 5 of 10

You're right! A. Yes is correct.

Sorry, wrong! is incorrect.

The right answer is A. Yes.

A good planner can improve a haphazard portfolio by analyzing its risks and returns, its redundancies and unnecessary investments, and the fees and taxes you’re paying. You can pay for ongoing service, or you might get a one-time-only “X-ray,” or portfolio analysis, for a few hundred dollars.

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Do You Need a Financial Planner? - Quiz

Question 6 of 10

You have a lump sum to invest, and you're thinking about buying an annuity. Should you consult a financial planner?

A. Yes
B. No

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Do You Need a Financial Planner? - Quiz

Question 6 of 10

You have a lump sum to invest, and you're thinking about buying an annuity. Should you consult a financial planner?

You're right! A. Yes is correct.

Sorry, wrong! is incorrect.

The right answer is A. Yes.

An annuity could be a great idea, or a lousy idea. It depends on your specific circumstances. What you need is independent advice that looks at your whole financial picture.

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Do You Need a Financial Planner? - Quiz

Question 7 of 10

You have a crazy dream. Maybe you want to retire early and volunteer to do good work abroad. Or go into business for yourself. The numbers don't seem to add up, but you're determined to find a way. Should you consult a financial planner?

A. Yes
B. No

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Do You Need a Financial Planner? - Quiz

Question 7 of 10

You're right! A. Yes is correct.

Sorry, wrong! is incorrect.

The right answer is A. Yes.

Just be sure to seek someone who specializes in “holistic” financial planning or “life planning.” You don’t want someone who only knows bonds and tax planning but nothing about what you want to do. A member of the Kinder Institute of Life Planning or the Alliance of Cambridge Advisors will see your situation as a challenge to meet and not a dream to be deferred.

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Do You Need a Financial Planner? - Quiz

Question 8 of 10

You've lost faith in the U.S. financial system, and you want to move your money into land and real estate or other more concrete assets. Should you consult a financial planner?

A. Yes
B. No

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Do You Need a Financial Planner? - Quiz

Question 8 of 10

You've lost faith in the U.S. financial system, and you want to move your money into land and real estate or other more concrete assets. Should you consult a financial planner?

You're right! B. No is correct.

Sorry, wrong! is incorrect.

The right answer is B. No.

Planners are not economists, and they rarely endorse unbalanced investment strategies. Be honest with yourself: If you want to move most of your assets into real estate or other hard assets, you’ll probably need more advice than any financial planner can provide. Just remember, you can lose money in this stuff just as easily as you can in stocks and bonds.

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Do You Need a Financial Planner? - Quiz

Question 9 of 10

You and your spouse are doing well and want to help support friends or family members with contributions to their college savings or health-care expenses -- but you don’t want to be so helpful that they come to think of you as a bank. Should you consult a financial planner?

A. Yes
B. No

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Do You Need a Financial Planner? - Quiz

Question 9 of 10

You're right! A. Yes is correct.

Sorry, wrong! is incorrect.

The right answer is A. Yes.

Planners will tell you that many of the situations they deal with result from family problems, whether it’s divorce, failure of a family-owned business, jealous relatives or a bunch of other things. To set up appropriate trusts or investment accounts and keep the peace, you need guidance -- a sensitive adviser or team of advisers will be worth the money.

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Do You Need a Financial Planner? - Quiz

Question 10 of 10

You're in your twenties, just getting started in life, and have no more than $500 each month to invest. You're afraid of making rookie mistakes. Should you consult a financial planner?

A. Yes
B. Probably Not

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Do You Need a Financial Planner? - Quiz

Question 10 of 10

You're in your twenties, just getting started in life, and have no more than $500 each month to invest. You're afraid of making rookie mistakes. Should you consult a financial planner?

You're right! B. Probably Not is correct.

Sorry, wrong! is incorrect.

The right answer is B. Probably Not.

Learn some lessons -- about you, about investing -- on your own first. You can find free guidance from your employer, your 401(k) plan sponsor, perhaps a local investors’ organization, or trusted media source such as Kiplinger's Personal Finance magazine and Kiplinger.com. Still feeling unsure? A consultation with a good planner could provide the sounding board and encouragement you need.

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Do You Need a Financial Planner? - Quiz

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Quiz | January 2010

Do You Need a Financial Planner? - Quiz

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Do You Need a Financial Planner? - Quiz

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Do You Need a Financial Planner? - Quiz

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Do You Need a Financial Planner? - Quiz

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Do You Need a Financial Planner? - Quiz

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