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What Kind of Finance Guru Do You Need?

If you’re ready to dump your DIY attitude to personal finance and try a little outsourcing, here’s the lowdown on the three most essential specialists that couples should consider adding to their roster of help.

1. CERTIFIED PUBLIC ACCOUNTANT (CPA)
What they do:
CPAs will save you the headache of filling out your tax forms yourself. Also, their keen understanding of tax law helps them find ways to whittle down how much of your paycheck gets siphoned off to the IRS. During your younger years, your taxes might have been simple enough that you could head down to H&R Block or Jackson Hewitt to get them done. Tying the knot, a new job, and a home mortgage are all reasons to seek out a more effective approach to tax prep, which a CPA can provide.

Where to find one:
Log onto the website for the American Institute of Certified Public Accountants (AICPA.org) where you can enter your zip code to find CPAs in your area.

What they charge:
$150 to $200 per hour. On average, it’ll take two to three hours to file your taxes.

How often you should meet:
Annually. That said, don’t wait until April to book your first visit. Many tax benefits require that you take certain steps before the end of the year.

To pick the right one, ask these questions:
“Will you be doing my tax return personally, or will you have a junior staffer do it?” Ideally, you want a CPA to do it.
“When there are changes in tax law, how do you update your clients?” On-the-ball CPAs will send out an email, newsletter, or call you personally.
“What additional services do you provide?” Many CPAs also offer financial planning, estate planning, and other fringe benefits.

2. FINANCIAL PLANNER
What they do:
Like personal trainers, these people whip your finances into shape, putting together a personalized budget that will ensure you’re saving enough—and investing it right. There are two types: Those who charge by the hour; and those who’ll actively manage your money for you and get paid a percentage of your stash, an arrangement called assets under management (AUM). Type 1 is more economical; type 2 is best if you have more substantial capital to work with ($25,000+).

Where to find one:
For a comprehensive list of certified financial planners in your area, plug your zip code into FPANet.org. For a more targeted search, go to GarrettPlanningNetwork.com (which specializes in hourly planners) or PaladinRegistry.com (a Consumer Reports of planners and advisors that reviews applicants and handpicks the top 10 percent nationwide).

What they charge:
Hourly financial planners charge $150 to $300 per hour; expect to spend 5 to 10 hours during your first year to get up and running, then two to four hours in subsequent years for checkups. AUM financial planners get paid 1 to 2½ percent of your investments annually.

How often you should meet:
Once or twice per year.

To pick the right one, ask these questions:
“Are you a certified financial planner (CFP)?” This means they’ve passed the Certified Financial Planner Board of Standards exam and adhere to its code of ethics.
“Are you a registered investment advisor (RIA)?” If they say yes, they’re registered with the Securities and Exchange Commission to give financial advice. As proof, ask to see their ADV-II form.

“Are you a fiduciary?” By law, this requires them to act in their client’s best interest.

3. BROKER
What they do:
Whether you’re hoping to buy stock in Google or invest in a mutual fund, you’ll need a broker to conduct the transaction. There are two types: full-service brokers (the kind you’d get at Merrill Lynch, Smith Barney, Morgan Stanley, UBS, and Wachovia) and discount brokers (at Fidelity, Charles Schwab, Vanguard, E*TRADE, and TD Ameritrade). If you’re willing to put in the time to research funds and keep tabs on your investments (it’ll take around five hours per month), you can get by with a discount broker.

Where to find one:
Check YellowPages.com or the websites of any of the large brokerage firms for a list of branch offices in your area. Once you locate one you want to visit, don’t just walk in, or you’ll get paired with a rookie. Set up an appointment over the phone and request someone with experience.

What they charge:
Traditionally, brokers earn their keep through commissions and “loads”—fees you pay every time they perform a transaction on your behalf. Depending on which stock, mutual fund, or financial product you’re buying, these fees may be a flat dollar amount ($10 for a discount broker or over $100 for a full-service broker) or a percentage of the money you invested (2 to 5 percent).

How often you should meet:
Quarterly—this way you can assess how your portfolio is doing and if you need to make any adjustments.

To pick the right one, ask these questions:
“What’s your Central Registration Depository (CRD) number?” Every broker or firm will have a unique number assigned to them by the Financial Industry Regulatory Authority (FINRA.org), which is a watchdog organization that oversees nearly 5,100 brokerage firms in the U.S. Plug the CRD number into the site, and you can see if your broker has any shady infractions.
“How do you get compensated?” If the response is “you don’t pay me anything,” that’s a red flag. Brokers must get paid in commissions and loads, and you want someone who is upfront.
“How often will you be monitoring my account?” Once a month is good, but if your broker says, “We use sophisticated computer models,” you won’t be getting the personal attention you deserve.

-- Judy Dutton

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