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Boroson on Money: Sixty fee-only financial planners in New Jersey

moneylogo_optAnd why they make sense for you

BY WARREN BOROSON
NEWJERSEYNEWSROOM.COM

Someone once asked Marylou Reeves, a Certified Financial Planner who is president of Thomas Mack Associates in Rockaway, what sort of financial planner to avoid.

Her answer: Any financial planner who uses the word "annuity." (She had in mind "variable" annuities, which are expensive – and lousy as a way of avoiding taxes. "Income" or "immediate" annuities may be okay.)

As for what sort of financial planners to actually hire, my own answer is: fee-only planners. Planners who won't put you into expensive junk – first Investors funds, for instance, or whole-life insurance – just to be rewarded with big commissions. In short, planners more likely to put your interests above their own interests.

To find a fee-only planner, as opposed to a fee-and-commission planner or a strictly commission planner, check out members of the National Association of Personal Financial Advisors (NAPFA).

Click here for a list of NAPFA fee-only planners in New Jersey.

Of course, there are splendid fee-and-commission planners, too, along with some miserable fee-only planners. But fee-only planners have a running head-start. And as Damon Runyon sagely observed, the race may not always be to the swift, the battle not always to the strong. "But that's the way to bet."

Besides, only maybe 20 percent of all fee-only planners belong to NAPFA.

Still, NAPFA members are the elite. They must submit an acceptable comprehensive financial plan before being accepted, and once they are members, they face stiff continuing-education requirements. Right now, lawyers, CPAs, and other financial professionals can become members; beginning next year, all members must be Certified Financial Planners.

Planners who work by the hour may charge $90 to more than $300, with a minimum number of hours required.

This is an especially good time – with high unemployment, a feeble economy, a worrisome stock market – to hire a financial planner, says Diahann W. Lassus, CFP, MBA, CPA. She's the chairman of NAPFA, and she has offices in New Providence and in Bonita Springs, Fla.

"If people ever need good, objective advice, now is the time," she says. "They can't afford to continue making mistakes. They have to pay attention to cash flow, managing expenses, paying down debt, and avoiding traps like interest-only mortgages."

What should someone look for in a planner - besides membership in NAPFA? Lassus mentions "solid experience – with clients like you yourself." You don't want someone who works exclusively with wealthy physicians to advise you on your shrunken 401(k) plan.

You also want to feel comfortable with a planner, Lassus emphasizes. Speak to a few of them. Just because someone has a high IQ and knows all about the tax ramifications of accelerated depreciation deductions doesn't mean you two will hit it off. If you're comfortable with a planner, for example, you probably wouldn't have trouble confessing something really dumb that you've done.

When you interview a planner, Lassus suggests, check who does most of the talking. A good planner must ask a lot of questions to understand a client – so the client, not the planner, should do much of the talking.

When do people consult a planner? Often when there's a change in their lives, she goes on. Perhaps a bad change: loss of a job, high medical expenses, a divorce. Or good changes: getting a raise, getting an inheritance.

Lassus herself has been in the financial planning field for 25 years – all of them as a fee-only planner.

Boroson on Money appears every Monday at Newjerseynewsroom.com.

Warren Boroson, who lives in Hackensack, has written more than 20 books. Articles of his have appeared in the New York Times Magazine, Reader's Digest, TV Guide, Consumer Reports, and elsewhere. You can write to him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . You can also see a standup comedy act of his at YouTube.com.

 
Comments (4)
4 Saturday, 27 August 2011 12:41
sirloin869
like communism, but with black people...

still waiting on the zombie apokolypse
3 Wednesday, 15 July 2009 13:38
Yankee
Even professionals are confused by the distinction between fee-only and fee-based. If a financial professional gets a commission because a client bought an insurance policy or mutual fund the adviser recommended, that's not fee-only. It's tough to claim objectivity when your compensation is tied directly to the sale of a product, even if it's the best product available.

It's definitely NOT true that a true fee-only planner can't advise a retirement plan or give advice to someone investing in their own 401(k), but again - if the adviser is being paid because a product was purchased, he or she isn't fee-only. That's the distinction, and that's why a "fee-based" planner is not the same as a "fee-only" planner. NAPFA's members are "fee-only," as the article says.

As long as consumers understand that a conflict of interest exists, there's no problem. But often people don't understand how much they are actually paying for advice when the cost is buried in a commission somewhere. Why should an adviser be getting paid today for telling someone nine years ago to buy an insurance?
2 Tuesday, 14 July 2009 16:11
Rob Siegmann
Every city could use an article like this and provide the list of the City's or State's list of NAPFA members. Good work.
www.fmgonline.com
1 Monday, 13 July 2009 16:11
Tim Watters
Warren,

Good article. I have never joined Napfa. I am Fee based. However, if you get paid "fees" for retirement plan clients (ie:401k plans) or get paid a renewal commision from an insurance policy you provided to a client 9 years ago, you are not allowed to be a member. There are many of us providing fee based RIA services that do not appear on these lists for similar reasons. That is why I stay with FPA (also they are the biggest trade assoc. of planners)

All the best!

Tim

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