I have decided that my 2010 New Year’s Resolution is to do a complete money makeover: prioritize debt repayment, develop a long-term/short-term savings plan, build an investment portfolio, create a budget and cash flow tracking system, start planning for retirement, and educate myself on tax strategies. I have two questions for you that I hope you will answer:

#1: what are the names/functions of the different types of financial professionals out there? (i.e. I need to know who will try to sell me a financial service/product, who will try to help me sort out my finances, and how I can tell the difference before I make an appointment?)

#2: for a total money makeover like I’m trying to achieve, is it necessary to see more than one type of financial professional or is there an all-in-one person who can help me achieve my goals?

The financial world is filled with an alphabet soup of designations for people who purport to be available to help you. Sometimes, however, these people are only working to help their companies or themselves and so you must be very careful in making your choices.

Here are some of the most common designations you’ll come across and how they may be able to help you, providing you find the right person.

CFP stands for Certified Financial Planner. This designation is recognized in 14 countries around the world. To become a CFP a body must have successfully complete an accredited educational program (or hold specific professional and educational designations), pass the national exam and have a minimum of two years relevant work experience. CFPs must also adhere to a professional code of ethics and must complete 30 hours of continuing education every year.

RFP stands for Registered Financial Planner, which is an advanced financial planning designation that requires holders to demonstrate their ability to apply their knowledge in the completion of a comprehensive financial plan. Like CFPs, RFPs are subject to annual continuing education requirements and a code of professional ethics. They must also carry professional liability insurance.

PFP stands for Personal Financial Planner, which is a designation created by the chartered banks to add credibility for their staff. PFPs must complete courses in personal financial counseling, insurance, estate planning and taxation. However I’ve met more than a few people with this designation who didn’t understand some of the most basic rules despite having completed the training.

Your next decision will affect your wallet. You can go “no fee” or “fee only.”  When you work with a fee-only financial planner you’ll pay an hourly or package fee for your advice. Since they do not make money selling product, they should be focused on trying to help you sort out what it is YOU want.  If you hit a body who seems to be pushing you in a direction you don’t like or offering options you don’t understand, cut your losses in terms of the time invested and move on. (Back in March 2008, MoneySense Magazine created a list of fee-only financial planners you might want to check out.)

When you work with someone who is selling products and earning a commission you will likely not be charged a fee, but will have to buy the products and services sold by that individual/financial company. This usually means a more limited range of options.

Whomever you choose, this person should be willing and able to refer you to specialists in a variety of arenas, not all of whom work for their organization (because if they do it isn’t a “referral”, it’s “cross-selling.”)  For example, if you need help with tax issues, if you want to create an estate plan or if you need insurance, your financial planner should have experts with  whom (s)he works regularly and to whom (s)he can refer you. If your financial planner can’t provide you with a list of resources without “checking” first, run for the hills. Most are well connected and work on the “I’ll scratch your back if you scratch mine” referral system, so they have each other names at their finger-tips.

If you’re looking for someone with whom you can forge a long-term relationship, start by narrowing your prospective list of candidates to about three or four. Ask friends, family, colleagues and business associates for the names of the people with whom they deal. Ask your accountant. Ask your lawyer. You might also want to take some courses on money taught by financial experts to see if there’s someone whose approach you really like. Read the paper and see who is writing the expert articles and who is being quoted.

Tomorrow: More on Hiring Help

Don’t forget to vote in this week’s poll. Go to Gail’s Blog at the top of this page and click. That’ll take you to the blog home page. Scroll down and you’ll find the poll on the right at the bottom. On this poll you can vote for as many options as you wish.