NOT LONG ago, when people could successfully pick stocks using a dart and the business pages, many felt comfortable doing their own financial planning and investing.
But ever since late last year, when it became apparent that the downturn in the market wasn't just a short-term buying opportunity, the demand for professional advice has picked up.
One of those considering hiring a professional is Nancy McCord of Columbia. McCord, an office manager, says she has handled her own investments with some help from brokers.
But with retirement looming and the downturn in the economy and her portfolio, McCord would like to hire a financial planner. "I want to make sure that whatever we have is retained," she says.
The 54-year-old wants a planner to determine whether she and her husband are on target for retirement. "I want someone who can help me learn and is willing to work with me," she adds.
So, when do you need the help of a professional? And how do you find the right one among the myriad of financial advisers, planners, consultants and counselors?
"Virtually everyone can benefit from having a financial plan," says Barbara Roper, director of investor protection of the Consumer Federation of America.
A 1997 survey by the group found that among people earning from $20,000 to $100,000, those with a financial plan had twice the savings of those without one, Roper says. "There seems to be a real benefit to getting your finances organized, figuring out what your goals are and making a priority of saving for those goals," she says.
Though planning helps, it doesn't necessarily mean you must hire a professional. Someone with uncomplicated finances or the time and talent to do the job on their own may not need to hire anyone, experts say.
But once finances become complex, or a major financial decision - such as deciding what to do with a lump-sum retirement distribution - is pending, it helps to seek the advice of a professional.
When looking for an adviser, start by asking family and friends who are very knowledgeable about finances for the names of trusted advisers. Or, seek recommendations from lawyers, accountants and other professionals who deal with planners. Also, check the referral service offered by the Financial Planning Association (1-800-282-PLAN or www.fpanet.org) or the National Association of Personal Financial Advisers (1-888-Fee-Only or www.napfa.org).
Your search will likely turn up all sorts of professional designations for those dealing with finances. The dominant designation for financial planners is CFP, or certified financial planner.
Designations are no guarantee that a planner is good, but it does indicate a level of commitment, experts say. Some designations, for instance, require testing and continuing education.
Once you get names of advisers, the real work begins.
Check out the advisers' background and disciplinary record. (Regulators are in the process of putting this information online.)
The Securities and Exchange Commission (202-942-8090) keeps disciplinary records for larger investment firms and the National Association of Securities Dealers (1-800-289-9999 or www.nasdr.com) maintains records of brokers and securities firms.
If hiring a CFP, call the Certified Financial Planning Board of Standards (1-888-CFP-MARK) to discover any complaints or litigation involving a planner.
For one-stop shopping on the background of individual advisers and small to large investment firms, Marylanders can call the Maryland Securities Division (410-576-7784).
Go to the Maryland Insurance Administration (1-800-492-6116, ext. 2388) for information on those licensed to sell insurance products in the state.
Interview at least three advisers face-to-face, experts say. Initial visits are usually free.
"Those face-to-face meetings are essential to determining how well you will work with a planner," says Nan Mead, with the National Endowment for Financial Education in Colorado.
Find out how the planner will be compensated. "The point to remember whether you pay a fee or commission, you pay," Roper says.
Consumer advocates generally recommend fee-only planners who are solely compensated by fees paid by clients, and, therefore, their advice is considered more objective. Fee-only planners sometimes also manage portfolios, which can be an incentive for the planners to recommend their own management services over others, a potential conflict, Roper says.
A fee-only planner on average charges $150 an hour. It may cost from $3,000 to $5,000 to draw up a comprehensive plan covering college, retirement and estate planning as well as taxes and insurance. A plan for, say, retirement only may cost about $1,500.
To manage assets, fee-only planners on average charge 1 percent of the amount they manage.
A commission-only adviser may charge nothing or a small fee for a plan, but clients will pay for the service through commissions on investments sold to them.