Finding good financial planner can be tough task
Of all the challenges individual investors face, one of the toughest is finding a good financial planner.
As a generation of do-it-yourself investors grows older and their financial lives get more complex, many people are realizing they want a human touch. Though they're comfortable researching investments on the Internet, they want some level of guidance from a planner.
“People say, ‘Look, I know what I'm doing but I just had a kid' or ‘I've gotten a bonus at work and money is now more important to me. It's more serious,' “ said Jon Stein, founder of investment website Betterment.com.
But while the wealthy have plenty of would-be counselors fawning over them, it can be difficult for regular investors to find a smart, objective and — perhaps most important — reasonably priced planner.
Fortunately, there are options for regular people through online-brokerage and mutual fund companies, fee-only financial planners and an emerging crop of Internet-based services, a few of which give access to advisers on the phone.
“We've heard loud and clear from clients that they need this type of help,” said Rodney Prezeau, head of advice offerings at Charles Schwab Corp. In fact, nearly 80 percent of the brokerage's clients said in a survey last month that either periodic or ongoing help from an adviser would make them feel more confident about their ability to meet financial goals.
Most of the programs out there aren't complete panaceas. Not surprisingly, less expensive services tend to offer less extensive assistance.
But many people don't need elaborate financial planning or the hefty fees that often come with it. They have straightforward portfolios and need basic guidance or a second opinion on their investment strategies.
“The majority of Americans don't need, nor should they pay for, full-time advice,” said Sheryl Garrett, founder of the Garrett Planning Network, a group of fee-only planners. “It just doesn't make any sense financially.”
A good place to start is large investment firms such as Vanguard Group, Fidelity Investments or Schwab.
At Vanguard, investors with less than $50,000 at the firm can get a financial plan, with a slate of recommended retirement investments, for $1,000. The cost falls to $250 for people with $50,000 to $500,000 and is free for those with more than that. The plans include a 45-minute phone call with a financial planner.
Those with $500,000 or more get another notable benefit — the ability to talk free anytime to a certified financial planner.
Questions frequently go beyond basic investment advice to such topics as long-term care insurance or trust and estate planning, said Karin Risi, the head of Vanguard's advice services group.
“We often get questions beyond ‘Which fund should I buy?' ” Risi said. The queries “run the gamut of a client's financial needs.”
Though $500,000 is a high threshold, it's measured on a per-household basis. Separate accounts held by each spouse, such as individual retirement accounts, count toward the total. The same goes for holdings at 401(k) plans that are managed by Vanguard.
At Fidelity, clients can get basic investment advice in roughly hourlong conversations with counselors on the phone or in a branch. The firm follows up with a report recommending specific mutual funds.
Clients with $250,000 or more get a designated adviser who can provide extensive guidance on a wide range of topics, including college and elder-care planning, wills and estate planning, and life and disability insurance. People who need detailed legal or tax advice get referrals to Fidelity's network of outside experts.
At Schwab, clients can get free 45-minute consultations over the phone or in a branch. The sessions involve a broad financial overview to assess current holdings and long-term goals. Full financial plans, including insurance and estate planning, cost $2,000.
One shortcoming of many of the services at brokerages and fund companies — especially the low-cost, no-frills plans — is that they're primarily focused on non-401(k) retirement savings. They usually don't recommend specific mutual funds in 401(k) plans or 529 college-savings plans. That's a problem for people who have worked at the same company for years, or whose children are nearing college age. They can have large sums in 401(k)s or college plans.
In these cases, investment firms sometimes suggest broad asset allocation, recommending in percentage terms how much an investor should put toward investment categories such as international stocks. That provides a general idea of where to invest. But the firms don't assess specifics of the funds, such as performance or fees.
Investors looking for more extensive assistance should consider hiring a fee-only financial planner who works by the hour. Most charge “asset-based” fees determined by the amount of money in a customer's account, often about 1 percent. Traditional securities brokers earn commissions on products they sell, giving them an incentive to favor the highest payoff investments.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Groom cited at Farmington wedding reception being filmed for reality TV show
- Starkey: Chryst a miserable failure at Pitt
- Banged-up Steelers can clinch with win over Chiefs
- Love of history started friendship with Dick Scaife
- Licensing boards increase fees to cover costs that include investigations
- Car wash explosion, fire injures 2 in McDonald
- Police investigate alleged institutional sexual assault at Pine youth treatment center
- Ex-Penguins defenseman Niskanen still miffed by coaches’ firings
- Pitt football fights to overcome steppingstone status
- Sony hack signals new, public front in cyber warfare
- Pitt players support Rudolph for job