Mark Johansson: Hi! I am Mark Johansson and I am the member of the Financial Planning Association. I am here to discuss choosing a financial planner. And Right now, I am going to talk about how planners charge for their services.

Financial planners can be paid in a variety of ways for their work. Some are paid by more then one method. Each method has its merits, choosing the appropriate method depends on your individual situation. The planner's competence and ethical standards should be the primary consideration in your selection process. However before entering into a relationship with a planner, you should have a clear understanding of how he or she will be compensated. It's important to consider which compensation arrangement may best suite your needs. There are several commonly accepted methods. Three methods tend to dominate how financial planners charge for their services.

Under the fee only arrangement the planner is compensated entirely from fees for purposes of consultation, plan development or investment management. These fees may be charged on an hourly or project basis depending on your needs or on a percentage of assets under management. Fee only financial planners must meet the following criteria. The planner must be compensated solely by all of their clients in the form of a fixed, flat, hourly, percentage or performance based fee by all of its clients and in all circumstances. The planner does not receive compensation or incentives from any third party. The planner does not receive any compensation that is contingent on the purchase or sale of a financial product. The planner does not receive commissions, rebates, awards finder's fees, bonuses or any form of compensation from a third party due to any client's implementation of a financial planner's recommendations.

Next, is the commission only method. There is no charge for the planner's advise or preparation of a financial plan. Compensation is received solely from the sale of financial products you agree to purchase, in order to implement the financial planning recommendations.

Then there is fee and commission. A fee is charged for consultation, advice and financial plan preparation on an hourly, project or percentage basis. In addition, the planner may receive commissions from the sale of recommended products used to implement your plan.

Two other methods that you may come across are fee offset or salary. Under fee offset commissions from the sale of financial products are offset against fees charged for the planning process. And under salary some planners will work for salary and bonus basis for financial services firms.

In all of the above categories of compensation, you should request information on any real or potential conflicts of interest. In addition to the commissions received form any financial product sales, you should ask whether there are outside incentives or bonuses to be gained by the planner for certain recommendations.

And remember by following these steps and choosing the right planner you can make the most of your financial resources.