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Posted by Todd H. on January 2, 2007, 7:14 pm
> > no financial planner working on commission is really interested in
> > or educated to put the needs of the client first. The financial
> > incentive is to sell product, regardless of its appropriateness.
>
> Don't you think one could say the above about any profession
> or job?
No. Lots of professions certainly, but not all. Believe me, I've
spent a lot of time career planning such that I don't have to be in
the position of advocating crap my customers don't need just to make a
living.
The temptation for impropriety is built into commission based systems,
and I don't want to have to be worrying whether my advisor is
recommending something to me because it's good for me above all other
options 100%, or because 80% it's a pretty good fit for me, and 20%
it'll put food on his table.
I feel the same way about Realtors. Buyer's agency is a misnomer of
course because we all know that a buyer's agent doesn't get paid
unless you purchase something, and their return on their time is best
if they get you to buy sooner rather than later.
Mortgage brokers-- that's also commission based. The higher rate they
can get someone to accept, or the more junk fees they can sneak into
the respa, the more money they make. The ethical ones don't do this of
course, but the frequency of finding unethical ones is alarming.
Home inspectors and attorneys though, at least in teh real estate
process are the only ones I like, honestly because they get paid
whether I close on a given purchase or not, so they're most likely to
keep my interests at heart because there's no financial element
swaying them to do otherwise.
> Yet I think plenty of financial planners as well as others working
> for a living know they darn well better put the client first pretty
> often, if not always, else word will get around and they will lose
> business.
The smart and ethical ones do this, I think. They have teh "long
haul" model that says if you don't screw your customers they'll be
customers for life and you won't have to find new ones.
The churn and burn model is held by others though. "I can make
enough screwing clients that I can afford to find others, and the
dumb clients may never find out."
> In addition to your suggestion to seek a flat-fee planner, I
> like rick++'s suggestion: Open an account at a big and old
> brokerage or mutual fund company, like Fidelity, Vanguard,
> Wells Fargo et al., and the reps there will give a lot of
> good general guidance "free" (as long as you have an
> account) as well as direct clients to good tools. Note that
> the tools tend to be similar, which says something.
Good advice!
Anyone working on commission raises my suspicion level I guess is all
I'm saying, and that's why I choose to do my own investment decisions
right now, but I'm on the cusp of getting flat fee help looking at
where I am and what I may need to be doing differently.
Then again, it probably is no surprise I'm also a "changes his own oil
because the quick lube flunkies have managed to screw it up one too
many times" type, as well as an engineer. Engineers can't stand
dealing with anyone on commission!
Best Regards,
--
Todd H.
http://www.toddh.net/
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