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I'm currently talking to a representative for a company that as part of the service they offer does a financial needs analysis (FNA). A quick online search for "financial needs analysis" turns up a number of companies offering similar services.

Are most of these services approximately equivalent? If not, what do I need to look at to determine if a particular FNA is a good FNA?

Additionally, if most FNAs are equal, are there any "rules of thumb" beyond simple common sense that can help me feel confident that a particular FNA isn't trying to maximize somebody's profit to my detriment?

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up vote 2 down vote accepted

You are being offered a package deal.

  1. We will do a financial needs analysis based on what information you provide us, e.g. current income and expenses, guesstimates of future earnings and expenses, current assets, guesstimates of retirement income desired and age at retirement.

  2. We will recommend investments for you to help you achieve your financial goals and even make them for you in our favorite stocks, mutual funds, and insurance policies.

  3. We will gladly manage all your investments for you for only a small annual fee so that you can do the things that interest you instead of wasting it in reading company annual reports and finding good investment opportunities.

Much of what you will get from 1. will be similar to what you will get from most of the other companies, though there will be minor, perhaps even significant, differences in the details depending on the particular inclinations and outlooks of the financial advisor. For example, what rate of inflation is assumed for the next n years will significantly affect the numbers. All of 2. and the fees in 3. will differ from company to company. You could ask for just 1. (for which you will pay a fee and then be exhorted to sign up for 2. and 3. even at this late date in which case the fee would be waived), and go with a different company for 2. and 3., or pay the fee and just do the investments yourself, or you could just accept the whole package offered by the company you are dealing with. Your choice might depend on how well you hit it off with the contact person(s) with whom you will be working closely.

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