Why 'Trust Me' makes me nervous

(Money Magazine) -- I've never met a financial planner who didn't claim to put his client first.

Take this colleague I dealt with recently. On his Web site you'll find him saying things like "My client's interests come first" and "I recommend products based on what's in their best interests and not based on which one would give me more earnings."

The Mole is a certified financial planner and certified public accountant who thinks you should know what goes on behind the scenes. Want to make contact? E-mail themole@moneymail.com.

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This same planner sold his 60-year-old client seven expensive variable annuities, which made up the vast majority of her portfolio when she came to me for advice.

He even put her Roth IRA in a variable annuity, which is paying for tax deferral within a tax-free vehicle. He sold her so many "income guarantees" that he drained her portfolio of more than $20,000 annually.

We all have our stereotype of the crooked financial planner who robs little old ladies and laughs all the way to the bank.

The reality, however, is more nuanced. Financial incentives are all around us planners, in both obvious and subtle forms.

If we recommend something, you can be sure it fits in with our fee model. A trustworthy planner should be able to tell you how he makes money off you. It's the ones who constantly bleat "The client comes first" who worry me.

To protect yourself, I suggest the following:

1 Always ask your planner to estimate your total costs and what benefit you are getting for it.

2 Ask if there is an alternative way to meet your goals that lets you keep more of your money.

3 Get the planner to put the above two answers in writing. If he won't, ask yourself why.

4 Always know what you are buying. As a general rule, the more complex it is, the worse it is for you.

You have to trust your planner or the partnership won't work. Note: That doesn't mean your planner shouldn't make money. It does mean that he shouldn't pretend he doesn't try to.