Recommending Suitable Investments

• No matter what type of financial planner you choose, he should be able to recommend investments that are suitable for your age, your proximity to retirement and your tolerance for risk. For instance, a competent financial planner would never recommend that an 80- or 90-year-old maintain a high exposure to the stock market, or that a 20-year-old have no exposure to stocks. A good financial planner can also assess each investor's risk tolerance and help her find investments that fit her needs.
  
  

Minimizing Taxes

• Saving money on taxes can have a profound impact on your ability to develop the kind of nest egg you need to provide a comfortable retirement, pay for the education of your children and reach other long-term goals. A good financial planner should be well-versed in tax law and able to help you develop a strategy that minimizes your tax burden while maximizing your earnings. This tax strategy can include placing high-turnover investments in tax-deferred accounts to avoid capital gains taxes and investing the bulk of your portfolio in tax-efficient index funds.
  
  

Planning for Retirement

• Chances are that one of your long-term financial goals is to enjoy a comfortable and well-funded retirement. A good financial planner can help you determine how much you might need in retirement and how much you need to save and invest each month to generate the income required to provide you with a comfortable retirement. A financial planner can also evaluate your current level of savings and let you know whether or not you're on track to meet your retirement planning goals. In addition, a financial planner should be able to help you reallocate your assets as you get closer to retirement, pulling money out of riskier investments such as stocks and putting more into lower-yielding but safer investments such as bonds and cash accounts.
  
  

Commission vs. Fee Only

• Financial planners may be compensated mainly through commissions, or they may derive their income only from the fees they charge to clients. If you choose a commission-based planner, be aware that the recommendations you receive could be driven by the commission that the investment pays. If you choose a fee-only planner, that individual should be willing to take personal fiduciary responsibility for your account, meaning that she's responsible for choosing investments based solely on your needs and not the need to make a big commission.