There are some advisors who engage in some dodgy ethical practices (the industry term is "churning"), but for the most part we aren't like that (incidentally, I'm a Certified Financial Planner myself). I used to be skeptical of why anyone would deal with a commissioned advisor, but any time you go to hire a planner, ask how they get paid. If they're not up front about their compensation, then don't do business with them. Most CFPs will have you sign a letter of engagement that explains all of this. Don't be afraid of commissioned planners, either. Overall, you're paying for the service you get from them over time one way or another.
The firm I'm with rebates commissions we get if we switch a mutual fund investment that has deferred sales charges, for example. If we made a decision we believe needs to be changed, we don't see that as a profit opportunity. Some in the business don't do this, but I consider such a practice wholly unethical (and it could be grounds for disciplinary action if the advisor is a CFP licensee!)
In the end, financial planning is a business, the planner/advisor is looking to earn a living. What you need to do in selecting one is ask questions - ask about what service they expect. Ask for referrals. Ask about what services they can provide, what they can't, and if they have referral agreements to help ensure all your bases are covered. If you're just starting out, a bank isn't a bad place to go - because generally you can set up a simple savings plan, and the advisors are generally salaried - the advantage to you there is that if you don't have a lot to invest, a lot of advisors (unless they are charging you a fee) won't give you a lot of time - time is money, and they haven't got a lot to make on the deal. A bank can help you get started and build up some equity, which then you can take to an independent advisor who can start to offer you more customized solutions.
If I were in the position of just being out of school, newly in the Forces and making money on a stable basis for the first time, that's what I'd do, knowing what I do.
I'm interested to see how good the SISIP FP's are, if they know their stuff well, I can't comment on them from any form of personal experience, though.
Garbageman said:
Isn't this a just a tad contradictory? Or are financial advisors not "other people"?
Also, if a financial advisor really knows all, then why aren't they financially independent, and hence, retired?
Just a little food for thought. I know financial advisors can be very helpful, but I believe all advice should be taken with a grain of salt. I used to go to an independent advisor myself, until I discovered that they were making a commission off of every transaction, and, as a result, wanted me to switch up my portfolio every 5-6 months!
