Got a Burning Financial Question?

I’ve been getting a lot of questions lately about finding good financial advice. In fact, I’d say that 90% of the questions I receive revolve around this issue.

I was reminded of how important it is to find a smart ethical advisor this week when a neighbor told my husband and I of a scam his father and brother got conned into that involved buying shares in some sort of industrial equipment. Their potential loss is $700,000. Apparently the men fell for this con artist because he seemed very wealthy and successful. Hey, wouldn’t anybody who is glib enough to sell expensive phantom machinery to the unsuspecting be wealthy?

One nice thing about finding advice today is that it doesn’t have to be terribly expensive. It used to be that only rich people could afford to hire registered investment advisors, who would oversee their portfolios for a yearly fee. But now lots of investors, no matter how modest their portfolio, have access to fee-only advisors. Plenty of these fee-only planners now charge an hourly fee, which will allow people, who have a burning financial question or two, to get them answered.

A perfect candidate for an hourly planner is a couple who emailed me a few days ago. They had pulled a lot of money out of their house in a refinance. Their intention was to remodel their house, but the bids were so high they are reconsidering or wondering if they should scale back their plans. Worried about saving enough for retirement, they wonder if they should scrap the project. In looking for an advisor, the homeowner was adamant that he didn’t want to go to someone who would try to sell him anything. That’s a legitimate fear.

I told him that an excellent place to look for fee-only advisors, who charge by the hour, is the National Association of Personal Financial Advisors. On the web site you can find contact information for advisors who work in San Diego or whatever part of the country you happen to live in.

What’s clear is that most people don’t know where to go to find financial help. And even when they end up in somebody’s office, they have no clue what sort of “financial expert” is greeting them at the door. This common confusion was highlighted by a 2007 study that the Consumer Federation of America cosponsored. The study, for instance, clearly illustrated that most people don’t know the difference between an investment advisor and a stockbroker. Seventy percent of investors surveyed didn’t understand that the primary service that stockbrokers provide is facilitating a customer’s trading of stocks, mutual funds, bonds and NOT investment advice.

To get a refresher course on the difference between different financial professionals, I’ll be writing more later in the week.

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  1. I am one of many who thought their broker was a investment advisor. How can I find unbiased advice of what to do with what is left of my shrinking portfolio? Thanks in NJ