How do you get good financial planning and investment advice? You don’t ask your neighbor over the backyard fence; or call your brother-in-law; or listen to strangers at the barbershop or at the hairdressers. The solution is to find an independent financial advisor who will give you unbiased, independent advice, and who will act as a fiduciary to you.
As a consumer, you have an alternative that you probably do not know anything about. Most people I come across do not know that my profession actually exists. Even my mother-in-law still calls me a broker.
There are Financial Planners and Investment Advisors who work independently of the large financial institutions; meaning they don’t work for Merrill Lynch or Smith Barney or H&R Block, or any of the other large banks or brokerage firms. They work at small firms in your community you may have never heard of.
They don’t sell products or charge commissions. You ask them specific questions about your finances or investments; or you ask them to look over your entire situation; and then you pay them a fee for their advice. That fee for the advice is not tied, in any way, to their recommendations, or to the implementation of their recommendations.
Most independent Financial Planners will work for an hourly rate; a rate for a specific financial planning question or engagement; a yearly retainer fee; a fixed fee; or something else; but not for commissions. These independent Financial Planners have pioneered the art and science of financial planning. Of course, it is a good business, and Financial Planner sounds nicer than broker or registered rep, so the large institutions have been copying from them, calling their sales reps Financial Planners or Financial Advisors, rolling out their own cheap canned financial plans, and shifting toward charging fees instead of commissions.
There are also Investment Advisors to whom you can pay a fee. They generally work under any of the same arrangements as the Financial Planners above, or a fee based upon a percentage of the investment assets they manage for you, which is the most common method in the industry. Most, but not all, Financial Planners are actually Investment Advisors, and vice-versa. A good place to start when looking for an independent financial planner or advisor is www.NAPFA.org