How to Plan for Your Financial Future

Suze Orman is an Idiot! Okay; no she’s not, and neither are many, if any, of the myriad of financial gurus you see on TV or in print in the national media. However, they all have one thing in common: They are ALL WRONG! Why are they wrong? Because they insist on giving you advice on something about which they know nothing: YOU. Have any of them met YOU? Do they know YOUR situation? They tell YOU what YOU should do. They tell YOU that this product or service is good for YOU, or it’s bad for YOU. Contrary to what financial media folks want you to believe, there is no “good,” nor “bad,” savings, investment, or insurance product. Each product, and each variation of it, is the best solution for a particular need in a particular situation. In other words, when one of these nay-saying know-it-alls says that something’s bad; or worse yet, that something else is the best thing out there, he or she has steered someone toward a less effective option. What’s the point? Let’s take a page from Suze’s own philosophy. She warns folks to be wary of how an advisor is paid, because how that advisor’s bread is buttered will affect what he recommends. Okay; there’s always the occasional bad apple. So, how does Suze get paid? She gets paid by selling you books and tapes, and by boosting the ratings of her TV show so the network can sell more advertising. How much more effective to do this than by discrediting the financial advisor on the street? She seems to imply that she’s risen above the ranks of the peddlers and that, with the help of her book, you can be a better financial whiz than those for whom it is a full-time profession. Has that book or tape series ever met YOU? Don’t get me wrong. I strongly recommend books and materials such as those published by Orman, the Motley Fool, or Dave Ramsey, but they can’t replace an expert who custom-designs a solution to your specific needs. Also, keep in mind that the advice you get from that book may be true for 90 percent of the people, 90 percent of the time, but may be financially disastrous for you in your current situation. How do you avoid the unscrupulous financial advisor? Some would recommend a fee-only advisor who has nothing to sell you. Problem: You’re probably not going to find one. This individual will normally charge you anywhere from $100 to $250 an hour to provide you with a recommendation. Now, while it’s violation of standards for this person to actively solicit the sale of a product, he can make it available; and if you ask, he will gladly sell it to you. In fact, over 70% of all fee-based financial plans are fulfilled directly or indirectly by the advisor or firm that designed the plan, thus debunking the myth of the unbiased non-selling financial planner. You do the math.

Instructions

Difficulty: Moderately Easy

1. Here’s how it should be done: If you’re a high net worth individual with a complex financial situation, you probably need a highly specialized fee-based financial planner (but you probably already have one, so I’m not writing this for you). If you’re among the rest of us, find an independent advisor from a trustworthy source. (An independent advisor is one who can offer many products from many companies, and who has no assigned sales quotas.) A referral from a trusted friend or relative usually works best. Don’t concern yourself with credentials. While education and training are certainly important, demonstrated loyalty and integrity are much more critical. If the advisor has done well by someone you trust, he’ll probably do alright by you too.
2. The advisor’s objective in your initial meeting is to establish a sense of trust. Consider carefully how he goes about this. Is he confident? Does he seem to know what he’s talking about? Does he care about helping me, or just reeling me in? Is he trying to offer me a solution before he’s had an opportunity to understand the problem? Is he flashing around titles and credentials as if that’s all I should need to know about him?
3. Be informed about the topics discussed. Read a book. E-mail Suze Orman (unless, it’s an insurance question – doesn’t appear to be her forte). Subscribe to the Motley Fool website. Talk to your parents or someone else savvy. If necessary, see a fee-based advisor for a second opinion.
4. Finally, do something! Rarely is the result of implementing mediocre advice worse than the consequences of inaction and procrastination. Also, do your business with the guy who devised your plan. He worked hard and deserves to get paid for it. If you choose to also visit a fee-based advisor, and he recommends something else, he’s earned his fee. Your original guy has still earned the right to implement any solution. And if you feel he’s done a good job for you, you also owe him the names and contact information of your closest dozen or so friends and relatives.

Tips & Warnings

• Most importantly, don’t wait; start planning right now! Time is the most critical component of a successful financial plan. Ask your friend, your dad, or your sister who he or she uses and how they’ve performed. Don’t pay for advice unless you truly feel an absolute need to do so. Use an advisor who believes in a comprehensive approach. If he shies away from insurance issues, he’s not qualified. Life, disability, and possibly long-term care insurance should normally be the top priorities in any financial plan. Investment advice should include non-market options as well as market-based ones, particularly if you are nearing retirement.
• Robert C. Drury is Vice President for Operations and the senior financial analyst for Safe Money Concepts, based in San Antonio, TX. You can reach Rob at 210-387-8875, or [e-mail].