Dear Liz: I’m 56 and have never had a clue about money matters although I have money. Over time, from your column, I have gleaned that one should go to a fee-based financial planner, but I have a hard time trusting people. I’ve had more of these professionals contact me than there are stars in the sky. I’m pretty scared and in “ostrich mode.” I would truly appreciate it if you could give me a nudge toward the right man or woman to chart my path.
Answer: Ultimately you’ll be charting your own path, but it can help to have a trusted advisor point the way.
“Trusted” is the key word, obviously. Many people prefer “fee-only” (not “fee-based”) arrangements because the planner is compensated only by the fees you pay, not by commissions he or she might earn on investment products. A fee-only planner doesn’t accept commissions, while a fee-based planner might.
Something else you’ll want to determine is whether the planner is willing to say in writing that he or she is willing to act as a fiduciary. What that means is that the planner is willing to put your interests ahead of his or her own. This is a much higher standard than most advisors must adhere to by law. Typically advisors only have to recommend “suitable” investments and strategies, rather than the ones that may best serve your needs.
It’s likely that many of the professionals contacting you are not fee-only financial planners but are instead investment salespeople of some kind. If you want a good financial planner, you typically have to seek one out.
Since you have money, you can start by asking for referrals from the National Assn. of Personal Financial Advisors at http://www.napfa.org. NAPFA holds its members to high educational, experience and ethics requirements. Many of its members specialize in financial planning for high-net-worth individuals and typically charge a percentage of your assets or a retainer fee. You also could get referrals from the Garrett network mentioned above if you want to pay for advice by the hour. Both organizations’ websites have additional tips for choosing a planner.