Be smart in hiring ethical and high-quality advisers

Making the best personal financial decisions requires knowledge, research and good judgment. Don’t expect perfection — you can do just about everything right, but things may not work the way you hoped for reasons beyond your control. That doesn’t mean, however, that you should not bother working to maximize your ability and chances of making the best decisions given a reasonable input of time and energy on your part.

Because I write financial advice books and columns, some people erroneously think that I’m a so-called do-ityourself advocate. I am not. People who read my books and columns are seeking wisdom and information, and I do my best to meet their needs and expectations.

At critical junctures, hiring competent and ethical help pays off. Too often, though, people fail to hire the right expert and fail to do enough homework before making the hiring decision. In the sections that follow, I explain hiring

commonly used advisers.

Hiring a competent tax adviser makes sense if you’re dealing with something for the first time or are dealing with a multi-part problem that is complicated. Or, perhaps you just want a second opinion.

Ideally, you should hire a tax adviser who:

has experience dealing with the sorts of issues you’re struggling with,

is focused on taxes and works at it full-time and/or has many years of experience,

suits your comfort level about being aggressive or conservative in pursuing deductions and other areas. Ask about his or her history with tax audits and the results, provides solid references, and carries errors and omission (liability) insurance.

Several different types of tax practitioners are eager to earn your business. Preparers, enrolled agents and Certified Public Accountants do the bulk of tax re- turn preparation for individuals in the United States. EAs and CPAs may represent you before the IRS should your tax return be audited or otherwise questioned. Tax preparation and advisory fees vary from $50 up to several hundred dollars per hour.

Tax attorneys deal with more unusual tax problems with the IRS and business deals.

Many folks make mistakes buying insurance, in part due to the influence of commission-compensated insurance brokers. That’s why in addition to finding ethical and competent insurance agents, you should be aware and make use of insurance that can be bought directly without brokers and utilize shopping services to help you ensure that you get value for your money.

When you do deal with insurance agents, be sure you work with those who specialize in the line of insurance you seek. For example, don’t buy disability insurance from an agent for whom it’s a sideline.

Attorneys

The primary reason you would seek the counsel of an attorney for financial purposes is to do estate planning, divorce or bankruptcy (and possibly in some states for a real estate transaction). Hire an attorney with lots of experience in the specific area (e.g. estate planning, real estate) you need help with.

Check references for competency and ethics, and be sure to comparison shop to get value for your money. Ask an attorney for a budget for a project. Because they bill for their time and they can profit more from conflict and dragging things out, beware of open-ended arrangements. Express your concern about managing costs and don’t hesitate to question how much something is going to cost or has been charged. Nolo Press publishes many excellent personal (and business) legal information and advice books. Contact Eric Tyson, author of “Investing for Dummies” and “Personal Finance for Dummies,” at eric@erictyson.com.