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Dear Liz: I had to nod my head when reading your recent column concerning the financial advisor who kept trying to get her client to buy a variable annuity. My wife and I for many years dealt with a like-minded lady who was personable and intelligent. We did purchase several annuities before research alerted us that maybe this wasn’t the best way to go. Every time we met with her she wanted to transfer us to a new “fantastic” annuity, which started up new surrender charges, some as high as 20%. Finally, our accountant suggested a financial planner. We paid the gentleman $1,000 for a full-bore assessment, turning over all our records and meeting three times with him. His advice? Buy a variable annuity. I have a hard time trusting anyone in the financial world.

Answer: It’s possible, but rather unlikely, that you were dealing with a fee-only financial planner. Some planners charge fees, but they also take commissions — and annuities tend to pay fat commissions.

If you want advice that’s free of such conflicts, you’ll need to look for a true fee-only (not fee-based) financial planner. You can get referrals from the National Assn. of Personal Financial Advisors at http://www.napfa.org or the Garrett Planning Network at http://www.garrettplanningnetwork.com.

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Categories : Financial Advisors, Q&A

2 Comments

1

[...] answered in a blog entitled “Fee based” isn’t the same as “fee only”: It’s possible, but rather unlikely, that you were dealing with a fee-only financial planner. [...]

2

This is a very common misunderstanding I’ve heard from clients and it is sometimes people are misled intentionally. Thanks for providing a clear explanation.