Prepare for the Financial Planner Interview

Business reporters often turn to financial planners for insight and perspective on personal finance. But that doesn't necessarily mean they always ask the right questions.

There are important points to consider before you pick up the phone to interview one of these experts.

"One of the most important issues to understand is that there are several areas of financial planning," says Vern Hayden, president of Hayden Financial Group, LLC, in Westport, Conn. "Some of those segments include cash flow, tax, investing, insurance and retirement planning. Financial planning is identifying where you are at, where you want to be and then closing that gap."

Coming to grips with this basic premise is a good start. It is also helpful to consider how your financial planning source achieved his/her credentials, which is no easy task.

"I believe reporters should understand what the professional credentials are and what is required to maintain them, particularly if they are dealing with a Certified Financial Planner (CFP)," notes William Babb, CFP with Sagemark Consulting in Cary, N.C. "The first-time pass rate to pass the CFP exam is only 55 percent. CFPs have made lots of sacrifices and are serious abut the profession."

These sacrifices translate to a dedication aimed at helping individual investors achieve their financial goals. Their knowledge can oftentimes add credibility to a myriad of subjects your business section covers.

In addition to the CFP certification, other highly regarded professional designations include the chartered financial consultant (ChFC), the personal finance specialist (CPA/PFS) and the chartered financial analyst (CFA). The ChFC deals chiefly in the insurance industry and the PFS is an additional designation for certified public accountants. The CFA primarlily deals with investments and wealth management.

Though you should feel free to ask any question that comes to mind, avoid asking questions to which planners should not have an answer.

"Market prediction questions are ill-advised because nobody knows," Babb says. "It gives consumers false indicators. Don't ask this question."

Hayden adds that if a financial planner does provide a market prediction, ignore such a response. Whether or not this is meant to advance their own agenda, many media outlets have been reluctant to include market predictions since talking heads were a mainstay on cable financial stations touting various funds during the bull market of the late 1990s.

It is also wise to avoid asking how much money a particular planner manages.

"None of them liked to be judged on how much money they make and how much they have under management," Hayden says. "I think reporters feel all financial planners are investment managers or advisors. If you manage money, it doesn't mean you are a financial planner."

One sector of financial planning that reporters seem to be communicating well to readers is retirement planning.

"Reporters do a real good job in the investment education area and how to maximize the use of 401(k) plans and Roth IRAs," Babb says. "(But) there needs to be more because there is a pending crisis in retirement for baby boomers that needs to be addressed. I can't tell you know many people I know in their 50s who have little or no savings and no savings plan."

While Hayden agrees the financial press is doing a better job in retirement coverage, he suggests that more pressure should be placed on employers -- a subject journalists might consider in their company coverage.

"I'd love to see the media do a much better job pressuring employers to clean up their plans," Hayden notes. "Generally, employers are more hung up on the administration of their 401(k) plans due to regulation concerns. As a result, employers aren't providing workers with the education needed."

There has been some skepticism associated with the financial planning field, which Babb points out is undue criticism for the majority of financial planners.

"I believe that the financial planning profession is not clearly understood," he says. "The financial press has a negative bias and paints the industry with a broad brush. Consider the 80/20 rule when it comes to ethical behavior. Eighty percent of advisers, regardless of the method of their compensation, will fall into the highly ethical category."

Still, Hayden says reporters should clarify how financial planners are compensated for their advice, whether through fees, commissions or some other payment.

"I think it's really good for journalists to come at a planner and get them to talk frankly," he says. "One of the key questions should address how they are compensated. I encounter and encourage people to differentiate between the movement of product, the distribution arm and the advisory function. Overall, I see a much better job being done and a better understanding of the field."

Below are some Web resources both Hayden and Babb suggest for business reporters:

College for Financial Planning

CFP Board of Standards

Financial Planners Association

Worth.com

Forbes Personal Finance

CNN Money

FinancialEngines.com

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism