Should Your R.I.A. Be on CSI?
Now and then everyone could use some help from a money professional. But what does it cost, and how can you be sure he knows what he's talking about?
By David Futrelle

(MONEY Magazine) – 1) Like professors and therapists, financial advisers list their credentials after their names. Three of these are legit. Which isn't?

[A] R.I.A. [B] Ch.F.C. [C] C.S.I [D] C.F.P.

ANSWER: C. If you didn't pick C.S.I. (short for crime scene investigation) as the ringer, you're clearly not watching enough TV. As for the rest: R.I.A. stands for registered investment adviser; Ch.F.C. for chartered financial consultant; and C.F.P. for certified financial planner. R.I.A. just means the adviser is registered with the SEC; no certification is required. To be a Ch.F.C. or C.F.P., on the other hand, you need to pass rigorous exams and have experience under your belt. Either can ably answer a wide range of financial questions.

2) True or false: The guy managing your investments is licensed as a broker, not an investment adviser, but it's legal for his business card to say "financial adviser."

[A] True [B] False

ANSWER: A. People in the investment business can call themselves almost anything they want. The only way to know for sure about credentials and fee structures is to ask.Why does this matter? Well, among other things, investment advisers are required by law to act in their clients' best interests. Brokers are merely required to put clients in "suitable" investments--which might mean funds with high fees and fat commissions.

3) What's the most common way for financial professionals to be paid?

[A] Flat fees [B] Flat hourly fees [C] Commissions [D] Your firstborn child [E] A percentage of your assets

ANSWER: C. Commissions--meaning that they're paid based on how much financial product they can get you to buy. (If your advisor won't shut up about the allegedly amazing advantages of annuities, that's why.) True fee-only planners, who are paid per project or per hour, have no monetary incentive to push particular products. (Fee-based, by contrast, can mean almost anything--including commissions.)

4) The rich are different from you and me. For one thing, financial planners return their calls. How big a nest egg do their clients have on average?

[A] $46,000 [B] $110,000 [C] $154,000 [D] $390,000

ANSWER: D. Many financial planners collect a percentage of the money they're managing for you--typically 1.5%--and some won't even consider taking on clients who have less than, say, $500,000 in their portfolios. But that doesn't mean the rest of us can't get help. Large fund companies like Fidelity, Vanguard and Schwab offer personalized guidance for anywhere from a couple hundred bucks (for basic asset-allocation advice) to a couple thousand for more complex questions. If your money is in a 401(k), your plan sponsor may offer access to advisers. You might also consider hiring an independent financial planner for a one-shot consultation. Expect to pay anywhere from $75 to $200 for a session.

5) If you buy funds through a commission-based adviser, what are you getting that you wouldn't get by investing in funds directly?

[A] Leads on hot new funds [B] Help finding low-fee funds [C] Better-performing funds [D] Better asset allocation

ANSWER: A. Unfortunately, the old joke about brokers making you broker seems to be true. Brokers are pretty good at finding small, young funds that are under most investors' radar. But that's about all, according to a recent study by researchers at Harvard Business School and the University of Oregon. Overall, the funds that brokers recommend have higher fees and perform worse than non-broker-sold funds.

VISIT...the website of the Financial Planning Association (Fpanet.org) to find a C.F.P. in your area...the website of the Certified Financial Planner Board of Standards (CFP-Board.org) to learn whether a planner's been disciplined by the organization...the website of the National Association of Personal Financial Advisors (Napfa.org) to find a fee-only planner in your area...and Myfinancialadvice.com or GarrettPlanningNetwork.com for a planner who is open to one-shot consultations.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.