how to choose the right If you don't have a relationship with an agent who sells life, health, or disability insurance, this article can steer you in the right direction and arm you with questions to ask as you interview prospective agents. And yes, you may want to interview at least three agents before deciding who to work with. A good place to start is asking for referrals from people that you respect - your friends, family and other advisers you currently work with. For example, CPAs may have several insurance agents they work with on a regular basis. To assist in your search, we have provided the following links to make the process easier. Find a CERTIFIED FINANCIAL PLANNER(TM) professional (CFP®) (800) 647-6340 http://www.fpanet.org/PlannerSearch/PlannerSearch.aspx Most CERTIFIED FINANCIAL PLANNER(TM) professionals provide life insurance, disability insurance and long term care. National Association of Insurance and Financial Advisers (Life Insurance Agents) (877) 866-2432 http://www.naifa.org/consumer/advisor.cfm Founded in 1890, NAIFA is the largest financial services membership association. Society of Financial Service Professionals (ChFC® and CLU®) (888) 243-2258 http://www.financialpro.org/ The CLU® or Certified Life Underwriter designation shows that the professional has additional training in the area of insurance. When you call each insurance agent, here are ten questions to ask: 1. What are your credentials? While there are no formal requirements other than passing a state insurance exam to become an insurance agent, there are several financial planning designations that will assure you of a minimum level of education and experience. A person holding the CERTIFIED FINANCIAL PLANNER (TM) (CFP®) designation must pass five college level courses that cover topics such as insurance, retirement planning, estate planning, tax planning, investment analysis and employee benefits. Then they must pass a two day, 10 hour exam. Planners also must have a bachelor's degree and a minimum of three years professional experience working with clients. The Certified Life Underwriter (CLU®) designation. According to the Chartered Life Consultation Institute, The CLU® educational program consists of three specialized courses that provide additional learning in life insurance applications, insurance law and taxation, and applied estate
planning. They go on to say that the CLU速 designation symbolizes an adviser's expertise in life insurance and estate planning. For a more complete description of different financial planning designations, check out: The Alphabet Soup of Financial Certifications 2. Can you tell me about your experience? It's important to know how long the agent has been in practice, and with what companies. And you'll want to know if they have experience working with clients who have financial issues like yours. If they have been with a number of firms in a short period of time, ask why. 3. What services do you offer? Find out what financial planning and insurance services they offer, as well as what other services they provide. Some financial planners may be fee-only, providing advice that is focused on your financial needs but they may not be able to write the insurance policy for you. Make sure you choose an agent whose business focus matches your financial goals. 4. Do you specialize in a particular area and what percentage of your practice is in insurance? Some financial planners are insurance licensed but they do very little life, disability and long term care insurance, focusing their practice mainly on investments. Others have more of an insurance focus and specialize in areas such as life insurance and long term care. 5. Will others in your office be working with me? Depending on the size of the agent's practice, there may be other agents, para planners or other professionals you will work with. Be sure to find out who will handle the maintenance of your account and who else will be involved in your financial planning relationship. 6. How are you compensated? There are a wide variety of ways that financial planners and insurance agents get paid. It's important to ask this question upfront, so there are no misunderstandings. When working with a financial planner, there should be a financial planning agreement that clearly spells out the compensation arrangement. Planners can be paid as fee-only, commission-only or fee based, which is a combination of fees and commissions. Traditionally insurance agents are paid by commission only. 7. Do you work with more than one company and what criteria do you use to choose the company you recommend?
Some insurance agents only work with one company. Other insurance agents are "brokers" and work with several companies so they can compare different policies for you. Sometimes brokers will use different companies for different types of policies. Find out whether your agent is a broker and if not, ask them why. It's also important to find out why they recommend one company over another. 8. Have you ever been disciplined for unprofessional behavior? A number of regulatory agencies keep records on disciplinary actions of financial planners and insurance agents. These include the State Department of Insurance, The Financial Industry Regulatory Authority (FINRA), and the CFP速 Board of Standards (if the planners have a CFP速 designation). In some states including California and Arizona, you can look up an insurance agent by name or license number on the state department of insurance website to see if they have an active license. 9. Can you give me references to some of your clients? Many planners and insurance agents are happy to let you speak with a few of their clients to find out how their experience has been working with that planner. Others do not provide client references due to confidentiality issues. If you are able to check references, find out how often their agent calls them, how easy it is to get an appointment, and whether or not they would recommend their agent. 10. What questions do you have for me? A good agent or financial planner wants to know what your needs are, your work and family situation, and what kind of advice you are seeking. If an agent does NOT ask you a lot of questions when you call to interview them, it could be a red flag. You want an insurance agent that focuses on your goals, not theirs. After asking these questions of three or more agents, you may find one that clearly fits the bill. If not, don't be afraid to keep looking for more referrals. As you talk to these agents, get a feel for their style - you want to make sure you'll be comfortable revealing personal information to your agent.