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Your Take: Do You Use a Financial Planner?

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Ask anyone in personal finance about financial planners and the first few words out of their mouth better be “go with fee only, watch out for those commissioned guys.” The only people who don’t say that are the commissioned planners! 🙂

That said, I’ve never actually met with a financial planner before. I don’t count the one time I met for lunch with a guy who wanted to sell me his company’s mutual funds (he was a commissioned planner) where we just talked generally about my plans, about retirement, and about insurance. He was a nice enough guy and lunch was pleasant (though I did pay for myself, so it wasn’t a date), but it wasn’t really a “meet” with a financial planner.

I also found it funny that the GAO issued a report that said the status quo on regulations for financial advisers (financial adviser, broker, and wealth advisers) was adequate and that, basically, they’re not pros. The article is interesting in that it’s draws parallels between a financial planner and a mechanic. I think both are important, though I’ve gone to a mechanic far more than a planner. 🙂

I wanted to know if you used a financial planner and what you thought of your experience?

{ 27 comments, please add your thoughts now! }

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27 Responses to “Your Take: Do You Use a Financial Planner?”

  1. billsnider says:

    In the early 90’s I turned 50 and realized that retirement was coming at me fast. I had two kids in college and a third not that far away. My current finances were good, but long term bothered me to no end. I did not understand the first thing about investing and the like.

    I hired a financial advisor to educate me and to restructure my finances. I followed his advice to the letter and regreted it. Being a financial advisor does not mean you have all the correct answers. There are some good and bad ones out there.

    I realized that I was not in CONTROL of my finances. I hjad to get educated. I thus read every book and magazine I could borrow and buy and also started to listen to financial shows on TV and radio. I now feel knowledgeable and more importantly in control. If I make a mistake, I have no one to blame but myself.

    Bill snider

    • Ryan says:

      My experience so far begins with Bill’s third paragraph. I’m teaching myself by reading about it both in books and online. I am only 25 so it’s early in the game for me, but I think I have a good headstart.

  2. eshie says:

    My family used a financial planner for a number of years, even though my father was incredibly intelligent about our money and investment choices. However, we felt that with our CFP’s experience and track record, the headache caused by trying to wisely diversify choices was better left to someone who dealt with those kinds of decisions day in and day out.

    Bonus? They did our taxes for us too!

    Also, once my father unexpectedly passed away, it was such a comfort to have people who could help us handle his estate and be willing to answer any questions about the complicated estate laws (especially in this unusual tax year for estate tax.)

    It was the best decision we have made!

  3. PokerCat says:

    Tried a couple, and I didn’t like it.

    I am an accountant by profession, and I found my knowledge of my specific situation was far greater than the planner.

    I think billsnider has the correct idea, if you are willing to learn, you will do better by yourself. However, if you are not interested in this sort of stuff, then a planner is useful

  4. Debbie says:

    Trying to figure out who’s looking out for your best interests is tough, especially when it comes to your money. A large majority of consumers who have made the decision to hire an advisor or planner to help manage their money unfortunately don’t have an objective way of going about the selection, interview, and hiring process.

    Most people use subjective factors when hiring their advisor:

    -The advisor took me out for a free lunch or round of golf.
    -The advisor is five minutes from my house.
    -I know the advisor from church (or another affiliation).
    -My friend referred me to the advisor. How do you know your friend knew the right questions to screen this advisor?
    -The advisor seems so nice. Feel like I’ve know him/her for ever.

    We recommend a much more objective selection and screening process, including the following:

    -The advisor/planner in question should not hesitate to provide you with full disclosure about how they are compensated.
    – Obtain written documentation about their background, education, experience, business practices and ethics. Word of mouth won’t cut it if you run into an issue down the road.

    Remember that you’re not hiring a financial advisor/planner for their personality or the fact that they take you to lunch or for a round of golf. You’re hiring them to manage your financial future. Always know who you are hiring and don’t be shy about asking probing questions. It’s your money, after all!

  5. I don’t, but I’d like to. In fact, I’ve TRIED to on three occasions in the past and have yet to have a good experience, so I’m a little hesitant to try again.

    The first was an acquaintance who was working for a big, well-known company that’s also in the credit card business. After just one meeting with him, I realized that he simply didn’t understand finance well-enough to trust him with my moneyI had no doubt that he’d GET THERE, but I wasn’t willing to be his guinea pig.

    The other two were affiliated with major, national, financial planning companies, and I only saw each of them because I happened to have accounts with those companies (and not by choice). One held my 401(k) at the time, and the other holds a large annuity that I inherited from a family member.

    The one from the company that held my 401(k) was also just starting out, and was the smarmiest guy in the world. He kept calling me by the wrong name, even though I repeatedly corrected him, which really put me off. I felt as though he was simply blowing smoke up my A$$ the entire time.

    The one from the company that holds the annuity is a much, much older gentleman, and clearly knew his stuff, but I got the very distinct impression that he didn’t take me seriously as an investor, being a young woman and all. Likewise, the company he works for is faith-based and that is a major part of their business model and approach, which just didn’t sit well with me.

  6. I am just entering the world of investments again, and I don’t like the idea of having a financial planner. I have my Bachelors in Finance, so I feel like I already know a lot of what they’re going to tell me.

    Even if I weren’t in the Finance arena, I think there’s a ton of solid information out there that’s available to everyone. So, what’s the use of a “professional”?

  7. Donald says:

    I have always thought that I should be using a fee for service financial planner, but have never thought that I had enough money to make it worth anyone’s time, so I never took the first step. Ironically enough, most people I know that use a professional advisor/broker lost much or almost all of their nest egg in the market crash several years ago. I just happened to be in an all cash position earning about 3% which in hindsight makes me look like a genius or lucky, I think I was just lucky. Much like PokerCat, my Bachelor’s Degree is in in Accounting and Finance, so I know as much as any professional in a similar age bracket. The only thing I lack is confidence and that is a work in progress. Bottom line, I am a bit of a control freak, if I have a risk of losing money I want the risk to be as the result of my wise or unwise decision making. Lastly, I have been dollar-cost-averaging my way back into the no-load mutual fund market and I am sleeping well at night.

  8. Becky says:

    This is great timing. I have used a broker for abour 4 years but she recently suggested changing my mutual fund investments so I decide to talk to an independent financial planner- fee only. I had a 30 minute intro conversation about my goals and portfolio and they gave me general advice including that my broker’s suggestion was probably wrong and I had been paying a lot in expenses and commissions. However, for more detailed advise and an analysis of my portfolio and asset allocation, I would have to pay the financial planner $750 and that’s a one time fee for an in-dept consultation. There are additional fees if I need to put the planner on retainer. I am considering it (maybe with my tax refund), but I also think $750 is expensive to pay for someone to talk to me about asset allocation so I will be studying up about investing this weekend. Oh- and I plan to close my account with the broker and manage my own investing going forward.

  9. govenar says:

    never used one. seems like you could’ve at least gotten a free lunch

  10. Dylan says:

    Just about anyone should be able to get a fair amount of useful advice in 2 hours with a fee-only CFP for between $300 and $500, without any other commitments or strings. While you’re not going to get your entire financial life mapped out in 2 hours, it should be enough time to get some direction or validation on what you’re doing. Also, If you want to save a few bucks when hiring an hourly planner, offer to take your own notes during the meeting rather than paying for additional time for the planner to write up a summary for you afterward.

  11. zapeta says:

    Nope, never used one. I don’t have the assets to make it worth the trouble so for now I’m the planner.

  12. Virtualindaj says:

    I inherited a small windfall, from my parents, Depression-baby children of immigrants. The inheritance comprised at least 7 accounts of different sizes and varying positions at all different brokerage firms, all online trading accounts– my father had been an active day trader when he died in a car accident. Other than maintaining a small money market account, a small mutual fund IRA and a company 401k, I was not knowledgeable about, or interested in, investing. Totally gobsmacked when I inherited all those accounts. Planed to hire a fee only planner, researched local advisors, set up initial appointments, and set about understanding investing so I would get the most out of those exploratory meetings. The more books, blogs, magazine and newspaper pieces I read on investing, the more fascinated I became, and the more I learned. Am allocating on my own for now, but have great CPA for taxes.

  13. eric says:

    Never personally used one but I’m not entirely against the idea of a fee-only planner if the situation calls for it.

  14. Darwin says:

    We have used one for the past 15 years plus. Today I wish I had educated myself on more investments. I don’t have control of the money we have in investments and retirements. Retired in 2003 and so much has changed and the advisors still get there percentages regardless. Now when we want money it is like asking your parents when you were growing up.

    Bottom line educate yourself and make your own investments and keep your money.

  15. faithann says:

    Saw a financial planner immediately after my divorce – he put my IRA into an annuity!! Shortly after, I realized how stupid that was and pulled out. Then went to a financial planner from a well-known credit card firm. He charged me 1% of assets and was going to put my into all loaded funds. I told him to find the best non-load funds and went with them. After a year, I got wise and like others, studied and read and inquired about stock, mutual funds, etc. Starting doing everything myself and saved a boatload! Sure, I’ve made some mistakes, but have come out way ahead.

  16. sophomore says:

    *Jim,* I think that the readership of this blog is interested in Finance and motivated to do self-study. Perhaps a follow-on question might be: “What advice and services would you be willing to pay for?” Some may be willing to outsource all investments and cash management to an RIA. Others may be willing to pay for specific advice on asset protection strategies (such as a trust).

  17. Brian says:

    Used one, failed to ask the right questions, got a cookie cutter plan. I should have known better when the plan called for both the wife’s and my IRA’s be allocated the same way and in the same percentages. I failed to really pay attention to the statements when they were showing increases. When the market tanked the advisor was like all the other talking heads to hold on for the long term and the market would come back. Problem is when we filled out the risk accenptence we were willing to take a 25% percent lose long term and the market was down 40% and he made no changes. Most planners will only advise you to buy stocks and bonds and totally ignore all other assests like real estate. My advice is to use one to help you and your spouse communicate better about your goals and risk tolorance and then follow your own allocation of funds.

  18. Eddie says:

    I touch base every year or so with a planner. Advice on blogs like this is great but by necessity very general,and it’s good to have another person who has the full picture checking to make sure I’m covering all the bases.
    I will say mine is very mellow- he gives me the options, makes his suggestions, and if I choose to take a different path, no problem. That is a big part of why our meetings continue.

  19. thunderthighs says:

    No. I read in one of Suze Orman’s books a long time ago that she felt they were unnecessary. Coming from a former financial planner, I figured her advice must be worth something.

  20. cubiclegeoff says:

    I haven’t needed one but for some situations, I’m thinking about using one to get advice, like to set up a trust.

  21. Mike says:

    I think a planner is great idea. Fee or commission based doesn’t really make a difference to me. You can research on your own what you should do financially but there is no replacement for good quality individualized advice.

    I have been in the insurance/financial services business for about 8 years so I would recommend this….

    1)Find a good planner that you trust and share with them your goals and concerns. They will make recommendations based on this.

    2)If they recommend some sort of insurance, get quotes and recommendations from your planner and least 1 or 2 more from insurance advisers.

    3)Investments-same thing. Go to strictly an investment professional and also get ideas from the planner.

    4)Tax issues – speak to your accountant and review the financial plan with them and possibly some of the recommendations by the other advisers.

    This process takes time but once you meet with all of the different advisers you can get a good feel for the best ideas and you will easily find out who really is looking out for your best interest. I can say from experience that there are a lot of CFP’s who sell awful products in say life insurance but they are fantastic at investments. Or vice versa. That is why it is important to get multiple
    opinions and do your due diligence.

    Most products are not commodities so I highly recommend getting expert opinions on everything you buy. Buy quality products from the people you trust and revisit your plan continually.

  22. Maria says:

    I went to a planner this year and it is the best financial decision I have made.

    I received a plan that looked at the following items: my net worth, cash flow, desiered retirement age, upcoming retirement income, including social security, and risk tollerance.

    My planner asked me a lot of questions I had not thought about: work after retirement? new home, either upgrade or downsize?

    The plan I received showed how my new savings and investments will perform at several different risk levels, and showed me that I can retire comfortably at age 55.

    This plan did not tell me what investments to have, but did give me an idea of stock/bond mixes and what the differences mean over long periods of time.

    I know that if I stay on my current track I do not have to worry about my financial future.
    I know I have someone looking out for me. This does not take the place of my own knowledge, interest and the work I need to do to plan for my future, but is a great second opinion from a professional.

  23. Julie K. says:

    Believe it or not, it´s good to have somebody by hand who has a wide range of information. It´s good not just when you want to buy your own property or to hire a flat it is good also to manage your personal financial decisions. You know that everything depends on your monthly income, no matter where it comes from. The other thing is to try not to be depended on it so much. You should always count with unexpected situations. But nevertheless be sure whom you trust when you want to talk about your finances. I also consider that you can educate yourself to make your own investments so you may need just a little advice from the others.

  24. elloo says:

    I used Ayco last year which had a deal going with my company for 5 hours of cheap phone financial advise. After speaking with the planner for an hour, I then sent him all my financial information. A week later, I received a report with lots of bar graphs, which was difficult to decipher. Another hour on the phone ensued to explain it all. Seemed that I was doing ok and needed some minor tweeking. I found a new broker, who is also a CFP. She ran a report, too. equally unclear. They were identical printouts (probably the same software package). So, I don’t think I’m confident about any of their advice or reports. Can anyone suggest some good reading for me?

  25. Sadie says:

    I fail to understand how paying a 1.0% to 1.5%+ fee to planner or a load of up to 4.75% for broker funds in a “down market” enables me to come out ahead!

    Furthermore, when exiting, there were horrendous fees as funds were not transferable to mutual fund.

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