How to find financial planners who aren't jokes?

[TheIronStar]

What are good ways to find highly skilled financial planners?

<rant>
I've been getting increasingly sick of the entire retail-level financial services industry. It's gotten to the point where "advisors" seem to be all too often actually salesmen, and where "professionals" don't seem to know much more than what I know myself or can find on any generic financial news website.

And in an era where market efficiency seems to have rendered many mutual fund managers to be not worth their fees (leading to the advent of index funds), I'm left wondering whatever happened to genuine expertise these days.

I even work in the financial services industry and even I'm getting cynical. Although co-workers of mine say that financial planners who actually know what they are doing don't stay in that line of work for long and soon jump ship to become private wealth managers, so I wonder if what I'm looking for really exists.
</rant>

If any members of the profession read this message, please do not take offense--I do not even know you, so I doubt it's you personally that I'm ranting about.

[Jes]

I'm looking for a financial advisor and struggling with the same problem. I used to work in banking, so I know the motivation behind almost everything that comes out of their mouth. That said, I feel like I can't just walk in someplace and trust the guy behind the desk. My girlfriend's father is the wealthiest man I know, and I was thinking about asking him for his advisor's number, but I can only invest a few thousand a year, which I'm sure means he won't even take my call.

Where do the poor go to invest?!

[TheIronStar]

Originally Posted by Jes

Where do the poor go to invest?!

Well, it's not necessarily a question of where the small-scale types like us might go to invest; we can do that ourselves in this day and age by simply going on the web, printing out application forms for the brokerages or fund companies, and sending in the check or whatever (these days it's more en vogue to do it entirely online).

The part that's throwing me is where to get worthy advice on the matter that's better the standard tripe that's out there and better than what we can do ourselves.

[hotwired]

I have one that I really respect. GoldenPondWealth.com - very top notch, and yes, they are "wealth managers"! I know that with a little education you can probably out do most. What I PERSONALLY would do however, if I didn't already have one, is to find a "fee only" so you don't have to worry about the products they're selling.

[Mayo]

You guy's really don't know how to use google search...

Certified Financial Planner Board of Standards Inc. - Search for a CERTIFIED FINANCIAL PLANNER™ Professional

Certified Financial Planner Board of Standards Inc. - Learn About Financial Planning

[Alchemiss]

I highly recommend looking for a fee-only financial planner. You pay for the hours she/he consults with you and they aren't pushing any products. You are their primary focus as are other clients you might potentially refer to them if you are pleased with their service.

Before we found our fee only planner, my husband and I were offered discounted financial advising through our company who had a large scale agreement with another Fortune 500 company. We were double-teamed by two sellers who wanted us to make all kinds of crazy investments in their products. ("You DO want to make money, don't you?") If we had done as they suggested, we would be in serious financial difficulty now. We walked out and I notified our company of their questionable practices. Good thing we were somewhat savvy.

We found our planner by word of mouth but here is a link to FEE ONLY planners.

Home Page - NAPFA - The National Association of Personal Financial Advisors

[JohnB23]

I manage my own money, I simply don't trust financial advisors, "planners", "experts".

I read alot from Warren Buffett and Charlie Munger (they are my financial planners). They think the whole financial services industry isn't worth nearly what they are paid to do.

It's not like paying a plumber to solve a problem or paying a doctor to deliver a child. The guys in financial services don't add the same kind of value.

My question to a financial planner would be..

-How much of your personal net worth is in whatever you are recommending?

-Why is it better than a simple index fund?

[mustard76]

I second the recommendation above. Find a "fee-only" adviser through the NAPFA.

Home Page - NAPFA - The National Association of Personal Financial Advisors

Some advisers claim to be "fee-based", but keep in mind that is not the same as "fee-only". "fee-based" means that they charge you fees AND make commissions from other sources (always indirectly paid by you).

Our fee-only adviser is great. She actually signed an agreement stating that should would not take commissions from any source. So she works for me! Try getting your financial planner to do that.

Advisers that work for big investment companies and banks are paid commissions from mutual fund companies. This means they will only sell you the mutual funds that pay the highest commission to them. These tend to be the funds that charge the highest expenses to you. You may not noticed it, but these expenses are paid from your account every year.

My strategy is to take advice only from my "fee-only" adviser and stick to low-cost funds (mostly index funds) sold by http://Vangaurd.com.

Many people are scared off by the hourly rates "fee-only" advisers charge ($50-200 per hour). If you have a lot of money to invest (>$100k), you would end up paying more in expenses buying the high-cost funds from a "free" or "fee-based" adviser, so the hourly rate is well worth it.

I fired my last adviser because he charged me 1% of my assets on top of the expenses charged by the funds that were about 1-2% higher than I now get with Vangaurd. That adds up to 2-3% of costs per year. Assuming I had $100k to invest, that's $2000-3000 of yearly fees paid to an adviser that was basically working for the mutual fund companies and not me! Do the math for your own situation.

The important thing to remember is that every adviser needs to get paid somehow. Make sure YOU are the one paying him so he works in your best interest. Otherwise, he will just work to increase the commissions he earns from the mutual funds or his employer.

If you only have a small amount of money to invest, I honestly don't know the right thing to do. I would begin by reading a good personal finance book. I would open a Vangaurd account and invest in their S&P 500 index fund. This would be a good long-term investment with very little fees. Watch out for funds loaded with fees that would quickly eat-up the returns you'd make on a small investment.

[silicon toad2000]

read the finance pages for a few months or get a few monthly editions of a finance mag, they generally have reviews and things. Even if all you get from it is a better understanding of how things work it would probably be worthwhile.

[justJeff]

If it is your true desire to become wealthy you should probably forget about financial planners. Talk with someone that you know has had investing success, and read as much as you can about various investments. Fee based planners may be okay, but if someone is actually successful at investing, they should have some money of their own and not be hawking their advice to others. There are of course exceptions, but if you really want to learn about money and investing, educate yourself and go it on your own. Years ago a friend talked to me about covered call investing. I picked his brain on the subject as he'd been employing that as one of his investment strategies for years. I also read everything I could on the subject and began paper trading at first until I was comfortable enough to start investing that way. For me, that was an excellent strategy and one that I still employ today with great success. There are many ways to invest, talk to as many successful people as you can about it, and then read up on what interestes you the most. A lot of people really dislike covered calls, that's cool, they've worked great for me, and for others as well. Find some concepts that you can really grasp and go for it.

[Alchemiss]

I second the statement about Vanguard low cost funds. They are great!

As far as the do it yourself approach, I must say discussing issues with our fee only financial planner also helped bridge the gap between my husband's spending ways and my saving ones. She almost always had ideas and insights neither of us considered as well as defusing financial-related tension between us. The cost of her services has more than paid for itself over time especially since most of what we do is on autopilot now based on her recommendations. At this point we just reassess our asset allocation periodically.