From: joec@fid.morgan.com (Joe Collins)
Subject: Re: Is Financial Planning worth paying for?
Organization: None
Distribution: usa
Date: Thu, 13 Aug 1992 18:07:14 GMT

In article <1396@yetti.UUCP> darryl@cs.yorku.ca (Darryl Gamble) writes:
>In article <1992Aug13.024928.26124@pony.Ingres.COM>, rion@Ingres.COM (Rion Cassidy (x3357) OGT) writes:
>|> 
>|> My experience with financial advisors is that they are biased towards
>|> investments where they get a percentage of the return.  For instance, 
>|> when I look into mutual funds they have always preferred the loaded ones
>|> because they get a commision from the load.  If you were to choose a 
>|> no-load fund they would get nothing and have to charge you by the hour.
>|> They hate this though.  The last guy I went to said he would work on 
>|> an hourly basis; my hope was that way he would be giving me the best
>|> advise regardless of load vs. none.  But he kept saying "I can't make any
>|> money that way..."

Not quite true - there are two broad types: commission-based planners (as you
describe above) and fee-based planners who charge a flat fee or sliding
scale (based on net worth) but will not sell you products. They tend to be
unbiased and don't have hidden agendas.

>|> When I look at the advice that these guys have given me, I find that I 
>|> could have gotten just as good or better advice from some of the better
>|> magazines on investment.  Check out Kiplingers, Money, etc. At least that
>|> way you'll some idea if the guy is competent or not talk to him.

Money is good as well but not the same as a good finanicial planner.

>I have invested a very small amount of money with a no-load fund directly
>through the company.
>
>In the recent simplified prospectus from them they say:
>For a dealer that sells between 0.5 and 5 million, they get a fee of
>.15 to .25 % depending on which type (higher risk. more fee).
>On the balance OVER $5 million, paid between .25 and .70 %.
>
>So the moral of my little story is...just because they are no-load funds
>doesn't mean your dealer gets no compensation.
>
>Darryl Gamble

Its also been studied and found that whether a fund has a load or not seems
not to correlate to how well it does. Thus, should be equally good odds
of success with a noload fund.

Financial Planners provide a myriad of services, more than just investing.
For example:
1-They can review your life insurance needs and make recommendations on
  getting more insurance (and what type) or less insurance. Also what kind
  and the timing of the same.
2-They likewise will study your estate preparations and determine proper
  ways to fund your estate.
3-They can review your company benefit package and point out gaps.
4-They can certainly look at your investment portfolio and strategy and
  make recommendations there.
5-They often have good access to more exotic investments, i.e. limited 
  partnerships in real estate, oil, natural gas, etc
6-They will also review your assets from a tax perspective and look for ways
  to restructure that to minimize future tax liability.
7-They will also be sure your investments match your tolerance of risks.
8-They can provide many other services as well, depending on the planner.

The above is usually all written up in a package of specific recommendations
and the timing of the recommendations. They will likely refer you to 
experts for things like setting up trusts, etc where you might need
good lawyers. Financial Planners are just that - they help you plan. They
are not brokers, lawyers and tax accountants or cpas. Good Financial
planners have gone through the CFP process for their formal certificate.

I have been to a financial planner and they were worthwhile, they spotted
a few things that needed addressing and directed me to some good investments
I never would have found otherwise.

Hope that helps...

BTW - I am not a financial planner but am married to a soon-to-be-a-fee-only
      financial planner.

Joe 
joec@morgan.com
Usual disclaimers....