There are many terrific financial planners and brokers that provide essential professional advice. Advise is good. Education is good. You being an informed investor is better. You taking the input and making your own investment decisions is best.
While it is easy to simply schedule a meeting with your financial planner once a quarter, will this optimize your profits? Do you spend more time flossing your teeth than learning to manage your hard earned savings? If so, you are not alone, but please do not find comfort in that!
One of the first questions that you should ask your financial planner is how they get paid. Independents (fee only) are paid by the number of hours that they are working for you. If independent financial planners receive a commission from the brokerage that they recommend, this commission is normally returned to you. This type of arrangement makes sense to me as the potential for a conflict of interest is avoided.
On the other side of spectrum are the commission based planners. These folks make their money from the company whose products they sell to you. Personally, this type of arrangement makes me nervous. It is like going to huge farmer’s market that is behind a privacy fence. In front of the fence is a small table with a few choices of tomatoes, green beans and zucchinnis. I don’t know about you, but I like to make sure that I have made the best choices within the entire market rather than just a few choices on the small table!
If you don’t know how your financial planner is paid, give them a call to find out. Please share your results as we can learn from each other and build our foundation of financial education. What did you find out?