MoneySense made a directory of fee-only planners but it’s from 2010 and has no screening. I examined some planners who appeared to be independent and are still in business. There are other sources listed at the bottom of the elusive search for financial advice (The Globe and Mail, updated Sep 10, 2012).
How do you spot the real planners? You can’t inject candidates with truth serum. If you want a planner who pays attention to details and keeps current. you’ll find signs.
CluesWhen you're looking for an advisor who claims to provide fee-only financial planning, look for all of the following
- a business domain name: these are cheap (e.g., $10 US/year)
- a proper website: beware of anyone without a website (they’re cheap) or who has a website with minimal meaningful content (why don’t they have anything to say?)
- a photo: do you want to deal with someone who’s hiding?
- a real email address: beware of anyone using a provider like Gmail, B (Google Apps for Business is a free to get email at a domain name and setup takes mere minutes)
- tweets: Are they current? When did they start? Is the content useful or promotional? Are there more Followers than Followed? If they aren’t on Twitter, perhaps they have difficulty upgrading their skills or showing generosity.
- designations: look for a Certified Financial Planner (CFP directory) as a minimum and perhaps a Registered Financial Planner (RFP directory). Others like accountants may have comparable skills or experience.
- LinkedIn profile: look for contradictions and omissions. It's tough to deceive for advisors with 100+ connections to deceive. Are they specializing or do they have unrelated businesses (e.g. holistic medicine, autobody shop)? Do they have believable testimonials? What did they do before?
- licensing: e.g., are they licensed to sell nonrelated products like life insurance (this may not be obvious or well disclosed; you may need to probe)
ExampleOne planner claimed to be fee-only but her website showed she could assist clients with a wide range of needs. Hmmm. LinkedIn shows she seems to sell a range of products including life insurance. A check on the government licensing website (FSCO) confirms she can.
Why wasn’t she honest about what she sold?
AppearancesFee-only is a difficult model for planners to make viable. Few clients are willing to pay for a financial plan when there are many "free" options. If you don't understand that "free" advice may contain biases, why would you pay for a plan?
Once you go the fee-only route, you could end up needing
- fee-only financial planning (including investment advice)
- fee-only investment management (unless you want to self-administer through a discount broker)
- fee-only insurance reviews
- The elusive search for financial advice (The Globe and Mail, Sep 2012)
- Is the best advice free or for-fee?
- Why advisors become advisors
- Imagine your advisor in the Olympics
- The new prescription for trust
- image courtesy of eurok (France)
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PS You may like the idea of using specialists but finding them takes time.