What a good financial adviser can do for you

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NEW YORK (Money) -- Question: I am a financial adviser, and I feel it's easy for you to be critical of our practices when you are at your desk and not in the field trying to help actual human beings. Can't you find just one testimonial or write one article reflecting a scenario (and there are a lot of them, believe it or not) in which an adviser has helped a person achieve their financial goals?

The Mole's Answer: Actually, I happen to be a practicing financial planner and am trying to help human beings every day. That's what distinguishes me from other financial columnists.

Still, I think your point is well taken. I do know many good financial advisers who help their clients achieve their financial goals. I'll get to why I don't write about them in a moment. But first, I'd like to address your point on what a good adviser can do for clients.

Good advisers know how to take a step back and look at a client's overall financial situation and let them know whether they are on track to meet their goals. They can then look at several areas of the financial plan and make recommendations on changes to increase the likelihood of reaching those goals. Some of the areas I've seen good planners address and add value to include:

Investments. Helping the client develop a low cost, tax-efficient, broadly diversified portfolio that meets the clients need and willingness to take risk. I've seen good advisers help their clients stay the course and stick to a long-term investment policy rather than reacting in a follow-the-herd manner.

Risk management. Part of managing wealth is protecting that wealth. A good planner can take a look at the insurance you need and make sure you are getting it in a cost-effective manner. I'm not talking about selling insurance investments, also known as "permanent insurance," I'm talking about pure, transparent insurance.

Estate planning. Making sure the client can pass on their wealth is another critical aspect of financial planning. Most advisers, like me, aren't lawyers but we can work with attorneys to make sure this aspect of their plan is in place.

Taxes. Taxes are costs too and they can take from our nest egg. To the extent that we can help our clients maximize their after-tax dollars, we provide value to our clients.

Retirement planning. We can then take all of the above and let the client know what they need to do to meet what is usually the number one financial goal - having enough money for retirement. In this capacity, good planners just give the facts without value judgments. We take the client's cash flows and model projected results, and tell him or her what needs to change in order to reach retirement goals.

So why don't I write about good planners?

First of all, I think other Money magazine writers deliver outstanding advice when it comes to these areas. My area of expertise is making readers aware of what planners, and even the clients, usually get wrong. That's the insight I can offer.

There is a second reason as well. In real life, my practice preaches the virtues of low costs, diversification, blah, blah, blah. This means that I tend to get clients that have had financial planners who have placed them in expensive, underperforming products. Their previous financial planner was often acting as a "life coach" to build trust, even though they, like me, have no qualifications whatsoever to act as such a coach. None of the Mole columns presume to tell readers how to live their lives.

Your question is a good one. The method to my madness, however, is not to convince consumers to avoid financial planners and advisers. There are many good ones out there.

Rather, I'm trying to create a "buyers beware" approach to educating the consumers on what may be driving our recommendations. My advice is to ask tough questions before selecting the adviser. Make sure the adviser really knows finance, rather than just sales, because what your adviser doesn't know may hurt you.

When your adviser gives you an important decision to make, think about it. Tell your adviser you'll sleep on it and get back to her. Always look for warning signs whether it's time to fire your adviser and get a new one, or even do it yourself.

It is my hope that consumers can use these tips to select a better adviser and to keep him on his toes. I firmly believe that an informed consumer base benefits the clients, the industry and the planning profession as a whole.