September 15, 2012


Pentothal (truth serum)You can easily find a jack-of-all-trades advisor who does "free" financial planning. And might sell investments, life/health insurance, employee benefits and/or mortgages. You can also find specialists in each niche.

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.


When 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)


One 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?


Fee-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
That's like going to a doctor, dentist and surgeon. Wait a second, we do. We don’t shop at department stores much either.


Podcast 186

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PS You may like the idea of using specialists but finding them takes time.


blame the regulators said...

The problem with fee only is that a person cannot give personalized investment advice beyond simple asset allocation if they don't have a
license. A mutual fund licence, limits to fund advice only. A stock license allows an adviser to recommend stocks. A stock licensed advisor can't get a license unless he works for a "dealer" firm. The dealer firms make their advisors work on commission, or fee based accounts based on the size of the investment portfolio. They are not allowed to charge fees for time or advice. So many people want to pay someone who is qualified to provide an unbiased portfolio reviews and recommendations and pay a reasonable fee for their time - while they invest the portfolio on line themselves....unfortunately, the Ontario Securities Commission forbids it, and so do the dealer firms. A person who is in the business of giving investment advice must be licensed - exception is if the investment advice is not purported to be tailored specifically to a person. What this means is that if a person writes an article and says "hey everybody, this stock XYZ is a screaming buy". That's perfectly fine as long as it's told to anybody and not aimed a specific person.

If you want unbiased investment advice that is not tied to commission income, and a pure fee for time only - you need to advocate to the regulatory bodies to find a category to register and license individuals who want to run their business this way. Otherwise, fee only financial planning cannot encompass the entire package which includes decent investment advice.

Rosemary N. Welty said...

Fee-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 about financial planning, you can have a certified financial planner

Chezka Aguila said...

Very nice blog it is a big alert to us on how to spot a fake fee only financial planner it is very important to know those things you mentioned above I do advise as well to know more about
Wealth Management Training so that we can avoid those kinds of fake fee people

Sana Robins said...

So glad I found this page. Thanks a ton buddy. Will watch this space for updates.
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Tiara Dsouza said...

It is some times out of bad luck say, we bump into these financial consultants who are no sharper than us. One way to test performance is time based consultancy.
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