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Financial Planner
updated: Sep 16, 2012, 2:19 PM

By Johnsanroque

I am thinking of using a financial planner. I have never used one before. I looked at the Edhat referral page, found a planner that got good recommendations, and had an appointment with him. We talked for quite a while. I understand how he works and how he charges. I liked him and my question is not critical of him personally.

I'm sure people who sent money for years to Bernie Madoff liked him and obviously thought he was good at his job. Is there any objective way or guarantee to to be sure that a financial planner won't run off with your money? I realize there are certifications for different types of planners, but those don't guarantee anything like, say, FDIC, do they? Is it all by word of mouth?

Comments in order of when they were received | (reverse order)

COMMENT 320804P	2012-09-16 02:25 PM
You find someone who analyzes your financial situation and recommends investments but has you make them yourself. That way they never have control of your money.
COMMENT 320808P	2012-09-16 02:37 PM
Also, a good financial planner will discuss more than investments. Ours looked at our insurance situation, recommending minimum coverage amounts for car/home, as well as a blanket policy and long-term care, and suggested we pay off our mortgage since we were carrying a low principal balance. Further, my husband thoroughly researched the recommended investments before going through with them.
COMMENT 320809	2012-09-16 02:39 PM
Make your own plans. Never give control of your funds.
COMMENT 320811	2012-09-16 02:42 PM
804 makes a very good point. In addition these are often "Fee for Service" Financial Planners. This is also a good idea because you pay then for so many hours of their service. They do not make money off of your investments or assets. BTW - FDIC insurance has to do with an investments you make in some bank products it is not really any type of guarantee connected to a Financial Planner. Also most people whose money was invested under Bernie Madoff used a Financial Planner who had what was called a "Feeder" fund that invested under Bernie. Many did not really know they were investing with Bernie. Another reason why 804 makes a good point.
COMMENT 320815P	2012-09-16 02:48 PM
We used a Certified Financial Planner who is a member of the National Association of Personal Financial Advisors, who provide fee-only services. You can search NAPFA's site for local members: http://www.napfa.org/
COMMENT 320871P	2012-09-16 05:49 PM
No. There are no certainties in life except for death. (Hey, you could be dead before the IRS comes after you; you never know.)
COMMENT 320887	2012-09-16 06:35 PM
There is no need for a financial planner. I am a 78 year old female and have always handled my own finances. If I lose my noodles there is Susan McNeely of Senior Planning Services whom I would trust.
COMMENT 320916	2012-09-16 08:24 PM
Show him your gun collection:-)
COMMENT 320941P	2012-09-17 02:08 AM
871P, the only constant in life is change.
COMMENT 320967	2012-09-17 07:27 AM
As with any investment, if it sounds too good to be true, it probably isn't. People who have been scammed believed the nonsense they were fed in terms of returns. I also agree that a fee-only adviser is the best way to go.
COMMENT 320996	2012-09-17 08:40 AM
Real simple, besides being a good person, you want someone who is a licensed broker that works for a national firm. There is a lot of protections for the consumer when working through a national brokerage firm., small or large. Reputation, financial strength and insurance coverage ( all required by the industry) is the backstop protection for the consumer. Madoff owned his own brokerage firm, printed his own statements and was able to falsify any documents sent to clients.
COMMENT 321021P	2012-09-17 09:31 AM
...or, you don't want a broker at all, just someone to advise. It really depends on what you are looking for. As far as investments go, low cost broad-base index funds for stocks and bonds are the way to go. Low cost targeted retirement funds for that pot of money are also wise. Stay away from actively managed funds - they don't beat market averages. Stay far away from currency trading, options, etc. That's Vegas stuff for almost everybody.
COMMENT 321030	2012-09-17 09:46 AM
Make sure the planner is a Certified Financial Planner CFP and works fee only. Any one at all can call themselves a financial planner but CFP is a registered trademark. You want to avoid the majority of people who call themselves financial planners who do nothing more than push mutual funds that they get a substantial fee (kickback) for selling the funds. A CFP will give you full disclosure in writing upfront that details any and all fees that they get from handling a client's funds.
COMMENT 321037	2012-09-17 10:12 AM
Most financial planners don't have a clue, and just invest your funds in a general index, which you can do for free. The problem with most advisers also, is that they give you zero protection for the downside. There's no guarantees on any investment, if there were, everyone would be rich. 021P - Using option strategies, like selling covered calls and protecting your positions with puts, is one of the most consistent ways to make a return in any market. If you're NOT using options, you are missing out on an extra 10-20% a year on your portfolio.
COMMENT 321092P	2012-09-17 12:26 PM
If you want to do it yourself, it can be pretty simple , esp. if you're retired, as we are. We use Vanguard no-load mutual funds; 1/2 in stock index funds, 1/2 in bond index funds. Not sexy but good enough for us over the long term.
COMMENT 321124	2012-09-17 02:45 PM
Investing in the stock market is like going to Vegas - more risk - more return. If you expect to earn more than 7% in this economy, then you will be risking $$$. FPs are just like bookies and skim from the top win or lose. Just find a good no load mutual fund that meets your investment goals. In this economy the best investment is to spend less. A dollar saved is a dollar earned. Only reason stock market goes up over time is because 401Ks/pension/retirement funds keep dumping money - which creates false demand.
COMMENT 321376	2012-09-18 08:19 AM
Go to a financial planner who advises only.do not invest with that person. It is a conflict of interest to have the advisor sell you something as his/her commission may influence the advice given.
COMMENT 321531	2012-09-18 01:24 PM
I looked into hiring a fee-only CFP or going with someone who can do portfolio management. The former help you develop an investment plan and build a portfolio, but you are responsible for buying/selling/managing investments. You can meet periodically for tune-ups. The latter will do everything the former does, but you also give them the fiduciary responsibility for carrying out all transactions. Here you need to be careful to vet your investment manager because they have access/control of your accounts. I know many well-to-do folks who do this. A typical fee is 1/2 percent of funds under investment. There are outfits that do this like Mission Wealth, private banks, etc. What I did ... a friend is a portfolio manager at a private bank. I paid this person to tutor me in investment fundamentals and help me build/manage a basic portfolio. I had lessons every week and books to read. Teach a man to fish. It was a great learning experience.

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