Financial planners CANNOT pick winning investments to beat the market, build wealth without risk or let you in on a deal that looks to good to be true. Advisers make money either by getting a commission to sell you a financial product or charge an asset based fee which is usually 1% annually of your assets So if your assets grow, so does their fee. But there are still conflicts since it encourages the fee based planner to capture as much of your money as he can. That's why few fee based planners encourage you to pay off your mortgage. They also like to put you in products that pay them automatically each quarter. In fact, few will tell you about a higher paying CD since banks don't pay financial planners. Obviously, a planner who works on commission would want to sell you products that yield the highest commissions. Also, if you don't have more than $100,000 to invest, commission based planners are the only ones who might take your business. But the conflict of interest is particularly stark among commission only planners. They usually sell load-carrying mutual funds, hedge funds,and private investments ranging from insurance to annuities to universal life. Another compensation model is those planners who get paid by the hour. They usually charge from $180 to $240 and hour and can be found at www.GarrettPlanningNetwork.Com
How They Sell You
Planners know that the quickest way to your money is your emotions. In one hour they'll try to get you so wound up that you might sign over your entire fortune. Many follow a multi-step system that gets you to talk about your values and your goals. They'll say things like, "describe your perfect day." Then they'll tell you how much money you'll need to invest for a string of perfect days. Or they might say they can get you to your dreams of spending more time with your grand kids if you let them handle your money right now. But most of them know that if you walk out of the office without signing , you may realize how manipulative the session was and never return. And once you sign and buy some product, it make take you years to get your money back without penalties. So never sign any document on your first meeting with a planner even if he or she tells you that you can still back out. Also, stay clear of so called free"educational dinners" and ads that boast wealth without risk and high guaranteed returns. They are just bait and switch tactics to get you into the office.You should also remember that anyone can fill an office with prestigious-looking credentials and call themselves a "financial planner". On the other hand, a good financial planner can help you define your financial goals, help you build a low cost diversified portfolio,and make sure you have the lowest cost insurance coverage for your needs. They can also help make the right moves with Social Security and your pension, reduce your taxes and pass assets to your heirs.