Comments on: 5 Ways to Limit Financial Planner Conflict of Interest http://20somethingfinance.com/5-ways-to-limit-financial-planner-conflict-of-interest/ Personal Finance Blog for Young Professionals Thu, 29 Jul 2010 23:56:16 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Scott http://20somethingfinance.com/5-ways-to-limit-financial-planner-conflict-of-interest/comment-page-1/#comment-13020 Scott Mon, 14 Jun 2010 18:56:03 +0000 http://20somethingfinance.com/blog/2008/02/07/5-ways-to-limit-financial-planner-conflict-of-interest/#comment-13020 Everyone wants to believe that they have the highest ethics and always put their client’s interests first. The harsh reality is, it’s much more difficult to practice that belief, especially if one gets hit squarely in the wallet. A lot of planners that flaunt their ethics usually turn out to be offenders. Always try to understand how any planner makes money from advising you and what incentives they get from it. When you think about it, it’s not a lot different from a surgeon’s bias when they suggest surgery; or a lawyer’s bias in advising to sue. It’s not logical to think that an incentive doesn’t matter. Does a financial planner really put the client’s interests first? Sure, there are those who actually do. They promote their services as a financial planner and get their fee in actually doing a financial plan for you – that’s all they do. No selling of investment products or advising you to invest on a particular product. Everyone wants to believe that they have the highest ethics and always put their client’s interests first. The harsh reality is, it’s much more difficult to practice that belief, especially if one gets hit squarely in the wallet. A lot of planners that flaunt their ethics usually turn out to be offenders.

Always try to understand how any planner makes money from advising you and what incentives they get from it. When you think about it, it’s not a lot different from a surgeon’s bias when they suggest surgery; or a lawyer’s bias in advising to sue. It’s not logical to think that an incentive doesn’t matter.

Does a financial planner really put the client’s interests first? Sure, there are those who actually do. They promote their services as a financial planner and get their fee in actually doing a financial plan for you – that’s all they do. No selling of investment products or advising you to invest on a particular product.

]]> By: etrade http://20somethingfinance.com/5-ways-to-limit-financial-planner-conflict-of-interest/comment-page-1/#comment-4421 etrade Wed, 26 Aug 2009 13:06:40 +0000 http://20somethingfinance.com/blog/2008/02/07/5-ways-to-limit-financial-planner-conflict-of-interest/#comment-4421 I totally agree. Even if I am new in stock trading, I would love to do all the hard work and not be burdened by another party which might expose me to the possibility of buying underperformed investments. There are so many trading sites that offers innovative tools and powerful search engine to jump start my investment portfolio. With them, I can also access to a trading network which can offer me unbiased market insights and analysis from the pros for free! That way I can totally educate myself and take control on my investments as well. I have nothing against financial planners but I am just not comfortable working with them especially that I have less knowledge on the market. When I made it big in the market and I am at par with Warren Buffet, then I will hire the world's best financial planners. But for now, I am comfortable with going solo. It is my money and I have the right to be cautious and that includes on the people I work with. I totally agree. Even if I am new in stock trading, I would love to do all the hard work and not be burdened by another party which might expose me to the possibility of buying underperformed investments. There are so many trading sites that offers innovative tools and powerful search engine to jump start my investment portfolio. With them, I can also access to a trading network which can offer me unbiased market insights and analysis from the pros for free! That way I can totally educate myself and take control on my investments as well.
I have nothing against financial planners but I am just not comfortable working with them especially that I have less knowledge on the market. When I made it big in the market and I am at par with Warren Buffet, then I will hire the world’s best financial planners. But for now, I am comfortable with going solo. It is my money and I have the right to be cautious and that includes on the people I work with.

]]> By: Jake http://20somethingfinance.com/5-ways-to-limit-financial-planner-conflict-of-interest/comment-page-1/#comment-501 Jake Wed, 10 Sep 2008 01:24:21 +0000 http://20somethingfinance.com/blog/2008/02/07/5-ways-to-limit-financial-planner-conflict-of-interest/#comment-501 You can tell if you have a good financial planner by one thing, HE is teaching YOU. He is helping you understand what it is you are doing. You should always know exactly what is going on with your money, and he should always have the answers. You can tell if you have a good financial planner by one thing, HE is teaching YOU. He is helping you understand what it is you are doing. You should always know exactly what is going on with your money, and he should always have the answers.

]]> By: stephanie http://20somethingfinance.com/5-ways-to-limit-financial-planner-conflict-of-interest/comment-page-1/#comment-143 stephanie Sat, 05 Apr 2008 03:40:16 +0000 http://20somethingfinance.com/blog/2008/02/07/5-ways-to-limit-financial-planner-conflict-of-interest/#comment-143 I have 2 financial advisers/planners, and they are an absolutely wonderful asset to me. I am 23 and have very little background in finance. I've become incredibly interested in the topic, but I feel like my time is more valuable to me than the fees I pay. (That is, I don't want to invest hours trying to pick out mutual funds right now - I'm a bit of a perfectionist, and will study and search until I know exactly what I'm doing and everything out there and the best thing for me. In the meantime, my money would be sitting in a checking or savings account earning 1 or 2% interest. Quick cost-benefit analysis says paying small fees beats earning no interest, at least in my case!) The adviser for my Roth IRA is through my bank, and she was a wonderful help to me about 18 months ago when I wanted to start saving and had no clue where to go or how to do that. My other adviser is for my 403(b) through work, and the vendors that work with us tend to be great because they know that if their fees are too high or their customer service less than satisfactory, they'll be taken off the vendor list. (I'm associated with a fairly large university, so there are a lot of employees that they want to be able to reach here!) I completely agree that financial advisers are not necessary for everyone, and its quite likely that in 10 to 20 years I will be managing my own assets, but right now they have been an invaluable tool in helping me get started! I have 2 financial advisers/planners, and they are an absolutely wonderful asset to me.

I am 23 and have very little background in finance. I’ve become incredibly interested in the topic, but I feel like my time is more valuable to me than the fees I pay. (That is, I don’t want to invest hours trying to pick out mutual funds right now – I’m a bit of a perfectionist, and will study and search until I know exactly what I’m doing and everything out there and the best thing for me. In the meantime, my money would be sitting in a checking or savings account earning 1 or 2% interest. Quick cost-benefit analysis says paying small fees beats earning no interest, at least in my case!) The adviser for my Roth IRA is through my bank, and she was a wonderful help to me about 18 months ago when I wanted to start saving and had no clue where to go or how to do that. My other adviser is for my 403(b) through work, and the vendors that work with us tend to be great because they know that if their fees are too high or their customer service less than satisfactory, they’ll be taken off the vendor list. (I’m associated with a fairly large university, so there are a lot of employees that they want to be able to reach here!)

I completely agree that financial advisers are not necessary for everyone, and its quite likely that in 10 to 20 years I will be managing my own assets, but right now they have been an invaluable tool in helping me get started!

]]> By: Kevin http://20somethingfinance.com/5-ways-to-limit-financial-planner-conflict-of-interest/comment-page-1/#comment-26 Kevin Mon, 11 Feb 2008 16:22:28 +0000 http://20somethingfinance.com/blog/2008/02/07/5-ways-to-limit-financial-planner-conflict-of-interest/#comment-26 I couldn't agree more. There is very little disclosure about which funds pay advisor's the highest fees. Many people I've talked to get steered into bloated fund categories that consistently underperform the indicies they claim as benchmarks. To my friends without a great deal of financial savvy, I tend to recommend an all ETF approach that gives exposure to many different asset classes at a target percentage for each-- it's the best way to save yourself the costs of a financial planner and the costs of actively managed funds. I couldn’t agree more. There is very little disclosure about which funds pay advisor’s the highest fees. Many people I’ve talked to get steered into bloated fund categories that consistently underperform the indicies they claim as benchmarks. To my friends without a great deal of financial savvy, I tend to recommend an all ETF approach that gives exposure to many different asset classes at a target percentage for each– it’s the best way to save yourself the costs of a financial planner and the costs of actively managed funds.

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