Your Take 

Your Take: Do You Use a Financial Planner?

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?

 Personal Finance 

Kiplinger & NAPFA: Free Retirement Advice on Jan 21st, Jan 25th 2011

Every year for the last ten years, the National Association of Personal Financial Advisors and Kiplinger’s team up to hold Jump-Start Your Retirement Plan Days where they give free advice to anyone willing to call their 800 number or visit their website. This year, the two free days are this Friday January 21st and next Tuesday January 25th. Between 9 AM and 6 PM Eastern, you can ask fee-only financial planners (the only way to go when it comes to financial planners) questions absolutely free.

You can call 888-919-2345 or visit the website to ask your question. The statistics they’ve compiled on whom they’ve helped is pretty amazing – over 37,000 consumers and 140,000 hours of advice. I’ve never called in but people have told me that the advice is usually pretty good, though not as good as sitting down with an actual planner (as you’d expect).

So, if you’ve had a burning question or two that you’ve wanted to ask a financial planner, square off a little time on Friday or next Tuesday and get it answered for free.

 Your Take 

Your Take: Do You Trust Financial Advisers?

Stock advice I can trust!I don’t trust financial advisers. I’m not entirely sure why but I inherently do not trust experts in any non-science field and I have my fraud radar on red alert if it has anything to do with money.

I separate financial advisers into two categories – those that help you plan and those that help you invest. I see some value in the ones that help you plan for the future. You sit down with the planner, list your financial goals, and come up with a financial plan that helps you achieve those goals. They provide another perspective on your situation and can give advice as to what has worked for others and what has not. While I’m sure that’s a simplification, that’s the basic idea.

Then there are those who help you invest. They can recommend a basket of investments to help you achieve your goals or they directly manage your money. The advantages of using an adviser like this is that you can stay hands off while they invest your money on your behalf. They can do the research, buy a diversified portfolio, and help you an area you may be weak in. Whether they’re fee only and provide only direction or commission, where they earn a percentage of assets, the end result is that you’ve outsourced the work.

So why do I not trust them? First, I don’t think I need someone to help me plan our financial future. While I’m certainly not an expert on the subject, I feel that sitting down and setting a plan with an “expert” isn’t going to be any better than if I sat down with a book on financial planning. As for giving my money to someone or taking the advice of an adviser for investing, I don’t see how that beats going with a mutual fund. Since they don’t have a crystal ball, are their recommendations going to beat a mutual fund managers? If I go safe with an index fund and opt for a lazy portfolio, will I really be that far behind? If the majority of actively managed mutual funds, staffed with the best and the brightest working on this 24/7, can’t beat the index… can an adviser?

Let me know what you think, hopefully I haven’t kicked over a hornet’s nest! (or maybe it’s good if I do, I don’t know what I don’t know so I’d love to hear another perspective)

(Photo: unlistedsightings)

 Personal Finance 

NAPFA Consumer Education Series

NAPFA Consumer Webinar Series
Every year, National Association of Personal Finance Advisors (NAPFA) and Kiplinger’s Personal Finance get together for their Jump-Start Your Retirement Plan Days, where you can talk to a fee-only advisors from NAPFA. It’s a pretty good resource if you take advantage of it, it’s not every day you can talk to a financial advisor for free without the pressure of them trying to sell you something (one reason why fee-only beats commissioned advisors).

NAPFA is putting together a NAPFA Consumer Education Series they bill as:

… designed to help consumers across the country better understand personal financial matters. Presented by the National Association of Personal Financial Advisors (NAPFA), each session will be led by a NAPFA-Registered Financial Advisor who commits to the highest of standards in the financial planning industry. Many of our instructors are authors, educators and leaders in the industry.

(Click to continue reading…)

 Personal Finance 

How to Pick a Financial Adviser or Planner

Empty SuitsAnyone can call himself a financial planner.

Think about that for a second… anyone can call himself (or herself) a financial planner.

Given that, and the alphabet soup of certifications and titles, how in the world is someone like your or me supposed to effectively sift through the bums to get to the gems? I spent a few hours talking to a “financial planner” several years ago and while he was a nice guy to talk to, he did more than offer up a few high priced mutual funds and insurance ideas. While the talk did introduce me to the idea of disability and term life insurance, I wasn’t really interested in learning more about them at the time and so our relationship ended. Was he a good planner? I have no idea because I have no way of determining that.

Fortunately, a two year old article on how to evaluate a financial advisers from MarketWatch is still pretty accurate. They recommend that you review three factors in a financial adviser:


First, you have evaluate their general credentials such as years of experience, number of clients, college degrees, and certifications. A planner should have a CFP (certified financial planner) certification from the CFP Board of Standards, Inc. and you can confirm this by using their search tool. An adviser should be an RIA (registered investment adviser) if they have their own firm or be an IAR (investment adviser representative) if they are independent contractors. RIAs and IARs will be registered with the Securities and Exchange Commission, you can look them up at the Investment Adviser Search tool. An IAR or an RIA is not a certification, it’s merely a sign that the individual or firm is registered with the proper government agencies. It’s mostly paperwork, but something that should be done by reputable firms (Thanks Lily!).


Get the adviser’s or planner’s CRD (central registry depository) number and look them up at the FINRA (Financial Industry Regulatory Authority) BrokerCheck tool. This can tell you if there are any problems with the person you’re looking to deal with. Another suggestion they give is to check to see if your adviser has a criminal record because a criminal record doesn’t prevent someone from obtaining a securities license (surprising, but true). That being said, a criminal record doesn’t necessarily mean the person is a bad adviser or hasn’t been reformed but to each their own.

Business Practices

Ask how the adviser is paid. The rule of thumb is that you always want to pay an adviser for their time, i.e. a fee-only adviser, rather than someone who earns a commission based on the investments you choose. In my case, my adviser a few years ago was free but earned a commission when I bought insurance or mutual funds through him. That always brings up the question of conflict of interest, is he steering me towards a product because it’s the best one for me or because he earns a commission? After figuring out compensation, talk about how you will conduct business. How often will you meet, how often will you talk on the phone, who else will join you in meetings, etc. Get a good feeling for how things will proceed.

Lastly, they recommend that you don’t choose someone based on their personality or sales skills, which I agree. However, after you’ve done your due diligence in the three areas outlined above, I think it’s important that you do pick someone who you can get along with. It should be the last gate in the decision making process, not the only gate.

Jeremy at GenXFinance just pointed me to an article he wrote for, “the best article ever written on the subject,” Finding a Financial Advisor that I found pretty informative. (Best? I don’t know… but pretty good :))

Do you have an adviser or planner (or are you a adviser or planner) and have any insight into this?

(Photo: pgoyette)

 Your Take 

Your Take: Trust A Financial Planner With Bad Finances?

A few years ago I met with a financial planner who was probably the same age, or a few years older, as me. We chatted a little, discussed some of my future plans, and basically he tried to sell me on some products. It was all in all not exactly a valuable meeting but part of that was my fault, I didn’t really have future plans. I had just graduated college, started getting my first few paychecks, and I had no plans for anything. I was just living life as best I could now that I had some real money. If I met with a financial planner now, it’d probably work out a little differently.

This guy lost $6M overnight. David Shorr had been a long time employee of Lehman and amassed quite a little collection of shares, all of which were rendered worthless on Monday. David Shorr works as a “wealth adviser,” a senior VP, at Morgan Stanley now and it made me wonder if I’d actually want the guy being my adviser (not that I’d be able to afford him!).

What if you found out that your financial planner was bad about his or her own finances? Or a financial advisor or broker whose investment portfolio was a mess? Would that change your perception of his or her advice? Would you drop them if you discovered they were bad?

I probably would.

I agree with the argument that being a good financial planner has nothing to do with executing a financial plan. A good financial planner needs strong organizational skills, good analytical skills, and a whole host of other skills that have nothing to do with sticking with a plan. A good planner can establish a savings plan that can set you up nicely to meet your future needs, given some assumptions, but it’s ultimately up to you to save. The financial planner with bad finances could simply be bad at that last part, the saving part. I agree with all that.

But would you hire a landscaper if his front yard looked like it hadn’t even been mowed in a year?

 Personal Finance 

How To Draft A Basic Financial Savings Plan

When it comes to long term financial planning, my wife and I don’t really have one. We have some long term goals but we don’t have any dates pegged for those goals (which include starting a family, going back to school, buying a new home, etc.), which is about as useful as having no goals at all. That being said, it was about time we sat down and put pen to paper so we would stop committing the fourth deadly sin of personal finance – failing to plan.

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Ask the Mole: CNNMoney’s Undercover Financial Planner

I had a lackluster experience with an alleged financial planner and I’ve read many articles detailing how you should find a financial planner, what you should ask him or her, and everything else you need to do to make sure you don’t a raw deal in the process. I’m sure many of you have read those same articles warning you about how you need to find fee-only financial planners or sleep on their advice. Well, I wanted to highlight a columnist at CNNMoney called “the Mole.” The Mole is an actual practicing financial planner who gives you the full skinny on what you should do to get the right financial planner.

Here are the one’s I felt were valuable reads:

You can find all of The Mole’s articles here.

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