Some banks to offer financial-planning aid to middle-income clients
There are many people who would like to see what a professional financial planner can do for them. Can a planner really get a family's finances in order, help a family keep track of income and expenses while it builds up enough savings to start investing?
Finding out, however, has often been a problem for some people. To reach a financial planner, they either had to go downtown, drive to a suburban office, or visit someone who did financial planning as part of another business, such as tax planning or insurance.
Now, another step in the highly competitive financial-services race has brought banks into the financial-planning picture. It is still a small movement, but several major banks are preparing to offer financial-planning services to their customers. Soon, finding a financial planner will require no more effort than strolling into the nearest neighborhood branch.
This kind of expertise is not new to the banking industry; bank trust departments have been providing investment, tax, estate, and overall financial guidance for their upscale customers for many years. And some larger banks are making that same service available on a franchise basis to smaller banks and savings institutions so they can help their well-heeled clientele.
This latest move, however, represents the industry's first attempts to provide these services to middle-income customers. At Bank of Boston, customers can, as of Jan. 1, talk to any branch manager about what financial-planning services are available. The branch manager will not, however, dispense financial-planning advice. That will come from a private planning- and investment-advisory firm, Quissett Corporation, of Cambridge, Mass., which has an agreement to provide the service to Bank of Boston customers.
Customers who agree to use the Quissett service will be given a detailed questionnaire, explained Stoddard G. Colbert, a first vice-president at Bank of Boston. Filling it out will require clients to pull all their financial information together, including income, debts, assets, monthly expenses, insurance coverage and costs, and estate plans, if any. The information will be analyzed by one of the financial planners at Quissett, who will prepare a report , make recommendations, and be available for telephone assistance.
The package costs $495, which makes it somewhat high for planning programs aimed at middle-income people, but it uses more professional involvement than many computer-based planning packages offer, Quissett president Justin Heater says.
Some of the other banks offering financial-planning services are incorporating them into their own trust departments, instead of using an outside firm, says James Jorgensen, publisher of a money-management newsletter in Cupertino, Calif. Some of these services are still intended for upper-middle-income customers, such as people earning $50,000 or $60,000 and more a year.
Whether you use a bank's planning services or a private, nonaffiliated firm, some of the same standards for selecting a financial planner should apply, Mr. Jorgensen says.
''Before I did anything, I'd find out the credentials, experience, and knowledge of the person who is going to work with my finances,'' he said. ''I'd be very careful.''
Since the words ''financial planning'' have become so popular, Jorgensen noted, many people have started calling themselves financial planners who may or may not have the proper background for it. The profession has no official standards or licensing - anyone can call himself a financial planner - and the label has been used by people whose primary background is in tax planning, insurance, stock brokerage, or banking. Yet these people may not have a broad background that includes all these areas.
At some of the better financial-planning firms - and possibly at some of the banks offering this service - they do not expect any one person to be able to cover all these bases. Instead, they rely on teams of experts from different areas to make suggestions about overall strategies and specific investments. This is probably a good way to go.
Finally, one of the most important parts of embarking on the financial-planning voyage is filling out that questionnaire. Many people have found that a few hours spent on this exercise is enough to bring about the financial discipline needed to begin a satisfactory planning program. Just realizing how much you are spending may be adequate incentive to begin a disciplined savings program. If this is all you need, there are books available with worksheets to fill out.
Still, many people want more guidance through the maze of investment, savings , and estate ideas. For them, a financial planner can be helpful, and the neighborhood bank branch could be a good place to start.