Ask Liz Weston

Get smart with your money

financial planners

Q&A: Finding affordable financial planning

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Dear Liz: I’ve read your advice and that of many others to only use a fee-only financial planner. However, we’ve never felt like we could afford that expense, and many of the planners I’ve found wouldn’t take accounts as small as ours anyway. We’re in our mid-40s and feel like we’ve wasted many years waiting to be “ready” for a fee-only planner. Is it really better to have zero financial planning advice, rather than just using a free planner?

Answer: A “free” planner is typically an advisor who is paid by commission. You may not pay for the advice directly, but you could wind up with underperforming, overpriced investments because the advisor is not required to put your best interests first.

You can find certified financial planners who charge by the hour at Garrett Planning Network, and the XY Planning Network represents planners willing to charge monthly retainers. Many discount brokerages and robo-advisors offer access to certified financial planners, as well. You might also consider an accredited financial counselor or financial fitness coach, which you can find through the Assn. for Financial Counseling & Planning Education. Whereas many certified financial planners cater to higher income people, coaches and counselors handle issues relevant to middle- and lower-income Americans, including budgeting, debt management and retirement planning.

Tuesday’s need-to-know money news

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Today’s top story: 5 wrong ideas you might have about financial planning. Also in the news: Bringing retirement savings goals closer, tips for back-to-school shopping, and how to kick your adult child out of the house.

5 Wrong Ideas You Might Have About Financial Planning
It’s not just for rich people.

If You Can’t Picture Retirement, Bring Savings Goals Closer
Saving for freedom.

Cross Items Off Your Back-to-School List With These Tips

How to Kick Your Adult Child Out of the House
Placing limits on your generosity.

Q&A: Where to find financial planner fiduciary oath

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Dear Liz: You often mention that a financial planner should be “willing to sign a fiduciary oath to put your interests first.” Is there a form or formatted letter available to financial planners who are willing to sign said oath?

Answer: There is. The Committee for the Fiduciary Standard, a group that promotes the idea that advisors should put their clients’ best interests first, has just such a form letter at www.thefiduciarystandard.org/fiduciary-oath.

Tuesday’s need-to-know money news

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Today’s top story: The 4 best times to file taxes. Also in the news: What’s different in this year’s tax filings, 5 traits shared by the best financial planners, and could this be the year to buy a house?

The 4 Best Times to File Taxes

Never Mind Tax Reform — What’s Different When I File This Year?

The Best Financial Planners Share These 5 Traits

Is 2018 the year to buy a house?
Could this be the year?

Q&A: CPA vs. financial planner

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Dear Liz: I read your recent response to the lottery winner. You made some really good comments and suggestions. However, you suggested that the person seek out a trustworthy, fee-only financial planner.

I am a certified public accountant. As you know, CPAs have historically been one of if not the most trusted advisors. I do get defensive when I read articles such as yours because never do people suggest that a CPA be consulted in situations such as these. In my opinion, financial planners do not have the overall breadth of experience and knowledge of the income tax and estate tax ramifications of decisions that need to be made.

Answer: If you’re holding yourself out as an expert in financial planning, you’d better be one.

There’s no question that CPAs are tax experts. But how knowledgeable are you about investments? Insurance, including life, health, disability and long-term care? Retirement savings and income planning? Education planning and funding? Social Security, Medicare and Medicaid? Employee benefits, retirement plan selection and business succession planning?

Those are only a few of the dozens of topics that a certified financial planner is required to know. CFPs are expected to look at clients’ entire financial picture and understand how the pieces should best work together. They are supposed to know that taxes may be a factor in many financial planning decisions, but taxes shouldn’t be the only or even the driving factor in any of them.

CFPs may not be able to match your breadth or depth of knowledge in your area, but that’s why they would refer clients to certified public accountants for detailed help with those issues. They also would know when to get estate-planning attorneys involved, and insurance agents and so on.

Some CPAs do become comprehensive financial planners by earning the personal financial specialist or PFS credential, which is similar to the CFP. The additional training and experience helps them understand how taxes fit into their clients’ larger financial picture. It also helps them know what they don’t know, so they know when to consult more knowledgeable experts for help.

Q&A: Fee-only financial planners

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Dear Liz: When you recommend a “fee-only adviser,” do you mean an adviser that charges customers by the hour for advice or one that charges a percentage of the customer’s portfolio that the adviser manages?

Answer: Fee-only planners charge their clients in a number of different ways. What distinguishes them is the fact that they are only compensated by their clients; they don’t accept commissions from the products or services they recommend.

Some fee-only planners charge by the hour, which is helpful for people just starting out or those who need targeted help, such as advice on their retirement portfolios. You can get referrals to fee-only planners who charge by the hour from the Garrett Planning Network at www.garrettplanningnetwork.com.

Many fee-only planners charge a percentage of your assets that they manage or a percentage of your net worth. Another popular method is to charge a quarterly or annual retainer fee. You can get referrals to these types of planners from the National Assn. of Personal Financial Advisors at www.napfa.org.

It’s a good idea to interview a few planners to discuss what they can do for you and the expected costs before making a decision. In addition, the Financial Planning Assn. has tips on choosing a financial planner at www.plannersearch.org.