Hire a financial planner

How a financial planner can help

A planner can assist you and estate beneficiaries with managing and transferring the deceased’s investment and savings accounts, and helping you to determine which assets to hold, which to cash out, and which to rollover into tax-preferred accounts.  Closing down these accounts can have costly tax implications to a beneficiary, so getting advice first is critical. Leaving money in high-risk investments for any significant duration of time after you have taken control of them also might subject you, as the executor or executrix, to unnecessary legal risk, so finding the right financial planner, and doing so on a timely basis, is an important task.

Financial planners can also work with each beneficiary and develop the best way to manage his/her inheritance. The key here is that they can individualize plans, based on the beneficiary’s age, needs, current financial health, etc. For example, an 18-year-old heir is typically a long-term investor who is better able to weather the ups and downs of riskier stocks that, over time, traditionally offer higher returns. An older person, particularly one in or nearing retirement, will likely want a more conservative portfolio that better protects assets from market downturns and provides income for future years.

What to consider when hiring a financial planner

When selecting a financial planner, you should consider several things. First, you will want to check their credentials and ask for references. Anyone can use the title “financial planner,” so you will want to understand their licensing, skills and knowledge before agreeing to hire them. The “Certified Financial Planner” title is given only to financial advisors who have completed extensive class work and passed rigorous testing, so it is one good way of determining if someone has extensive experience.

You also should consider asking any potential planner to provide proof that he or she has invested the money of his clients wisely in the past, in both up and down markets. Ask the planner to connect you with at least five of his or her clients to see what they think of the job he or she has done. You also should use the Internet to search for any praise that the planner or their firm has received or any recognition from credible third parties (financial publications, TV networks, etc.) or complaints filed against them. Often, ethic violations, disciplinary actions, client disputes, and/or legal actions are documented online.

You also should inquire how the planner will make his or her money. Will you pay an hourly rate or a flat fee? Will you be charged a percentage of the amount of money handled for you? Is a commission charged on any securities or other financial products bought and sold on your behalf? Fee-based advisors make more money when you grow your portfolio, but make less when you lose money as your account shrinks, so generally have your best interests at heart. Knowing these things will help you better compare financial planners and select the best one for you and the deceased’s heirs.

While there are no guarantees when investing in the stock market, a financial planner has the resources and knowledge to suggest the best portfolio options, including bonds and investments with guaranteed returns. In short, even if you are financially savvy and keep up on investment news, financial planners will likely know more. As a result, they can prevent unwanted risk and better ensure that any inherited money is handled correctly – which undoubtedly would please the deceased who worked hard to earn and save the money in the first place.