Q&A: Look for a fee-only planner

Dear Liz: I am starting to receive marketing mailings from financial advisors inviting me to a free lunch or dinner to listen to annuity investment presentations. I went to one recently by a fee-based financial planner who told me he also acts as a broker when investing in annuities. He’s been pressuring me to invest all of my retirement funds into a fixed indexed annuity. Isn’t this a conflict of interest? I assume he gets paid by both me and a commission from the insurance company if he signs me up for this investment. Why do financial planners force annuities on seniors? Is it because they know they will also get commissions? Is it better to sign up with a fee-only financial planner? I’ve read that the fee-only planner will act only in my interest, not pushing investments that bring in a commission.

Answer: Yes, yes and yes.
Remember your folks telling you, “There’s no such thing as a free lunch”? Remember that the next time you get one of these offers for a “free” meal (or a timeshare presentation, for that matter), because you could end up paying dearly. These presentations are made by salespeople who can be really good at talking people into products that are not in their best interests.

A good advisor would never pressure you or suggest putting all your investment eggs in a single basket. Look instead for advice from a fee-only (not fee-based) financial advisor who will agree, in writing, to be a fiduciary, which means they’re committed to putting your interests ahead of their own.

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