Money Magazine Ask the Mole

Wanted: Free financial advice

Most planners will give you a free consultation, but good advice will probably require more than that.

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By the Mole, Money Magazine's undercover financial planner

Have future topics for the Mole to address? E-mail him at
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NEW YORK (Money) -- Question: I am reluctant to get a financial planner. Will they do an analysis of your portfolio? Does that commit me to use them? How do you get their advice without hiring them as a financial planner?

The Mole's Answer: If you want good advice from a financial planner, don't expect to get it for free. And, yes, that means you will need to hire the planner. Though as I'll explain later, that doesn't mean you need to keep paying her year after year.

I have written about those instances where financial planners take advantage of their clients to sell them products that are much better for the planner than they are for their client. There are also instances where the consumer takes advantage of the planner. That's when the consumer requests the free initial consultation most of us planners offer with no intent of actually moving forward. They're just looking for some free advice.

Since your question was specific to advice on your portfolio, I'll address this issue.

I also give a free initial consultation to a prospective client. However, I'm very picky with whom I take the time to meet with. I don't in the least screen prospective clients by the size of their portfolio, but I do require them to invest an hour of their time by filling out a client profile and getting it to me in advance. I also have them spend some time on my Web site to make sure they know what I'm about, which is diversification, low-costs, tax-efficiency, yada, yada, yada.

In my mind, that does two things. It shows me that the consumer is committed enough to invest some of their time. Second, it shows the consumer that the meeting will be specific to their situation and not a sales pitch. Which is a good thing because, and I'm not trying to brag here, but I may be the world's worst sales person.

During the part of the meeting focusing on the portfolio, I give my initial thoughts that include:

  • Risk tolerance
  • Recent performance
  • Expenses
  • Ratings of fund families
  • Tax efficiency
  • Low-Hanging Fruit (things they can do to guarantee a higher return)

At the end of the meeting, I feel like I've provided something valuable to the consumer, even if they don't hire me. I've given them some specifics they can take action on.

Most do hire me, mostly because the changes they need to make in their portfolio are often rather complex.

For example, nearly everyone that comes to me has their portfolio reverse engineered to pay the highest taxes. That is, they tend to have bonds in their taxable accounts and stocks in their tax-deferred accounts. That results in more taxes on the same portfolio. Redesigning the new portfolio and implementing it in such a way that minimizes taxes is where a good financial planner can add value. The last thing you want to do is make the moves immediately and later find out you've been hit with the alternative minimum tax.

My Advice: If you're looking for free advice from a financial planner, let them know ahead of time. They may still be willing to meet with you. But if they are, be warned that you will probably be in for a sales pitch meant to play on, and prey on, your emotions. I think you'd be far better off educating yourself by reading Money Magazine and

Getting educated and finding an hourly adviser might even be a better approach. In my completely biased view, an hourly model has fewer economic conflicts between the planner and the client and provides the most objective advice. It's also good for clients looking for a one-time independent analysis of their portfolio, as you said you wanted.

Hourly financial planners are fairly rare but one source is the Garrett Planning Network. Before hiring that planner, be sure that you ask them some tough questions. In particular, you'll want to ask some technical questions about your portfolio. Then go home and sleep on it before making any decision.

The Mole is a certified financial planner and certified public accountant who - in the interest of fairness - thinks you should know what goes on behind the scenes in financial planning. Want to make contact? E-mail  To top of page

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