Written by Liz Kudwa
Q: I have been thinking about employing the services of a financial planner. Is there a guide that rates financial planners so I know whether I’m selecting a good one?
A: This is a great question and one we frequently receive. As far as I know, there is no book or guide that rates financial planners. However, there is quite a bit of information available on how to select a good financial planner. The Financial Planning Association’s (FPA) website contains a variety of information for wary consumers. There are standards to which financial planners must adhere and anyone who passes the requirements of the Certified Financial Planner (CFP) Board of Standards will be awarded CFP Marks. To obtain the CFP certificate, the following qualifications must be met:
Examination. An individual must successfully complete the CFP Board’s Comprehensive Certification Examination, which tests the individual’s knowledge on a multitude of key financial planning topics.
Experience. An individual must acquire three to five years of financial planning-related experience prior to receiving the right to use the CFP marks.
Ethics. An individual must voluntarily ascribe to the CFP Board’s Code of Ethics and Professional Responsibility. This voluntary decision empowers the CFP Board to take action if a CFP(r) professional should violate the code of ethics. Such violations could lead to disciplinary action, including the permanent revocation of the right to use the CFP marks.
Education. A CFP professional must obtain 30 hours of continuing education every two years in the body of knowledge pertaining to financial planning areas such as estate planning, retirement planning, investment management, tax planning, employee benefits, and insurance.
Additionally, the Financial Planning Association’s website contains a wealth of information including a checklist for interviewing a financial planner. Some interview questions are:
* What are your areas of specialization?
* What are your qualifications?
* How long have you been a financial planner?
* How many clients do you have?
* Are you certified? What are you educational qualifications?
For the rest of the checklist, you can visit http:// www.fpanet.org/public/tools/tenquestionschecklist.cfm.
Lastly, the FPA provides numerous articles to help you make your decision. In particular, "How a Financial Planner Can Help You & How to Choose The Right One" is a great article that will arm you with the information you need to make an educated choice. Visit this link for the entire article: http://www.fpanet.org/public/tools/ financialplannerhelp.cfm
Q: I’m interested in starting my own small business, but also apprehensive. Do you have any tips on what mistakes to avoid?
A: Yes, there has been much written on starting small businesses and cnnmoney.com even has a brief article, written by Jessica Seid, highlighting 5 "deadly mistakes when starting a business".
Too many entrepreneurs see their dreams fall apart – their firms fail because of common pitfalls that could have been avoided. One-third of small businesses fail in the first two years, according to the Small Business Administration, and a little more than half fail within the first five years. But that doesn’t mean you have to give up your dream. Here are five common mistakes to avoid, so you can build a successful business.
1. Too little cash
"The biggest issue that most entrepreneurs have is money – they’re not properly capitalized," says Douglas Long, owner of a management consulting firm that advises entrepreneurs and aspiring entrepreneurs. He recommends his clients have approximately three times what they think they’ll need starting out, largely to protect them from any downturns. Steve Hockett learned that lesson the hard way when he set out to open his own business. "A few years ago, I was working at a bank and it wasn’t a good fit, I was bored and I wanted to become an entrepreneur," says Hockett. Without a business idea of his own, Hockett decided to become a franchisee. Although he picked a very successful franchise, Hockett admits, "I was undercapitalized, it took too long for the business to build and my cash ran out." Forced to abandon the business after only a little more than two years, Hockett says he was "devastated." "The real thing I missed was anticipating my cash needs and being able to weather the first year," says Hockett, who has since become a successful franchise consultant. "One of the hardest things I’ve ever done was to make the decision to pull the plug on a dream."
2. Thinking small
You may be competing for customers against larger companies with more resources. But you don’t have to show it. Harprit Singh founded Intellicomm Inc., a communications services firm, in 1994 when he was a second-year MBA student with just $100 in startup capital. "A few years ago, my colleague and I drove hundreds of miles to give a presentation on our service to one of the leading global insurers," said Singh, president and CEO of the Philadelphia- based company. "I could clearly see the excitement in our service quickly dwindle in the packed conference room when we mentioned that we are a small business with limited resources. From that day on, I vowed never to let our size hold us back." Singh began to focus on the advantages he could offer as a small firm in the telecom industry, such as greater expertise and speed of execution. Intellicom now has more than 4,500 customers in 45 countries. Remember, you’re not small, you are boutique. You’re not tiny, you are personalized.
3. Skimping on tech
Sure, buying gadgets costs money. But giving your employees laptops, Treos, BlackBerries and wireless access allows them to do more with less. In addition, the latest technology will help you and your employees respond promptly to customers, no matter where you are or what you are doing. Ironically, it’s often easier for a small company to adopt and deploy new technologies, vs. big companies that may be wedded to legacy systems and cumbersome, outdated technology. Your small size can be a plus, letting you be nimble and swift.
4. Underestimating the importance of sales
For small-business owners starting out, most of the attention should go to sales and revenues, Singh says. If sales grow, expenses will take care of themselves. And no matter how small, every company needs a dedicated sales pro to make sure business is constantly rolling in the door. If you are your own salesperson, Long suggests practicing on friends and family to hone your skills. "You could have the best idea in the world, but if you can’t sell it, you won’t be successful."
5. Losing focus
Every business should have a vision of what they will be when they grow up. And the more focused the vision, the greater the chances that the business will realize its goal. Further, the vision should to be translated into specific execution tasks to achieve desired results. Before embarking on your business, Hockett suggests carefully laying out all the attributes of your company and what you’ll need do to make each aspect of the business succeed. ad he created a detailed plan for his franchise, "I would have waited longer until I was in a better cash position to start," Hockett said. "But I was impatient. I made a decision based on emotion rather than fact."