AARP The Magazine - April/May 2012

Who I am
I spent 20 years in the business world as a corporate
finance officer before becoming a personal planner more
than a decade ago. I started my practice because I knew that
a lot of the advice families
got was mediocre or worse,
and I hoped that I could help
counteract that. That’s also
why I write very candidly
about how this profession
works, and what you should
know about it before you
seek advice from me or any
other planner. (This article
isn’t a plea for business: I
have a long waiting list and
don’t need to advertise.) For
two years I penned these
insights anonymously in a
column called The Mole in
Money magazine; today I
write for the website CBS
MoneyWatch and else-
where, often giving an in-
sider’s view of my industry
and how it treats its clients.
Sad to say, the worst cases
often involve older clients.
We planners target you be-
cause you have the larg-
est nest eggs, and the more
money we manage, the big-
ger our take. Also—and let
me be frank here—you of-
ten view your money more
emotionally than younger
people do, because you have
so much at stake. And that
makes you vulnerable.
Help you define your
financial goals.
Help you build a
diversified, low-cost
investment portfolio—
and then stick with it.
Make sure you have
the lowest-cost
insurance coverage
for your needs.
Help you make the
best moves regarding
Social Security and
your pension.
Reduce taxation on
your investments.
Help you pass assets
to your heirs.
What planners
can do for you
What planners
want from you
I’m a certified financial planner (CFP) and a member of
the Financial Planning Association (FPA). Roughly 70
percent of the FPA’s 23,800 members are CFPs; earning
the designation typically requires months of study to pass
a reasonably tough exam. About half of the members have
been in business at least 15 years. As an organization, we
want to establish planning as a true profession, one seen in
the same light as medicine, the law, and accounting.
But that’s not our only motivation: Planners have finan-
cial aspirations of our own. We make money by getting it
from you. This isn’t evil in its own right. But it is a conflict
of interest, and it pervades everything we do.
We spend a great deal of effort trying to win your trust.
A CFP is a serious designation, but that’s not true of all the
strings of initials after our names: At least 100 financial
designations are in circulation, each meant to convey
expertise in something. Some prove only that the planner
passed an easy exam. One organization, representing the
Certified Retirement Financial Advisor (CRFA) designa-
tion, solicited me in 2007 to obtain both this “prestigious
designation” and to sell me the names and contact infor-
mation for older people who might want to buy an annuity.
(CRFA spokesperson Lynda McColl says that the organi-
zation is under new leadership and has not sold names
since 2007; its current certification requirement consists
of a 100-question test.)
Other businesses will anoint us (for a fee) with even lofti-
er distinctions. For instance, I’ve received an America’s Top
Financial Planners award from the Consumers’ Research
Council of America. Forbes.com found that the council’s
Washington, D.C., address was a rented mailbox, and its
vetting process is questionable, to say the least: To memo-
rialize my honor, I called the 800 number the council gave
me and received a $183 acrylic plaque—bearing the name
of my dachshund, Max Tailwag’er. After I wrote about this
in my Money Watch column, the council contacted Forbes
.com (but not me) to demand the plaque’s return.
And there’s the e-mail I recently got from Americas Top
Advisors.com, telling me I was among the top 1 percent of
advisers in the U.S. Recipi-
ents of this honor are chosen
via “peer nomination, in-
dustry recognition, or sig-
nificant press mention,” the
message said. To earn this
accolade, I had only to pay
an annual fee of $995 (minus
a 20 percent discount).
How we make
money drives
what we sell
Advisers make money in
two main ways. You need to
understand which method
your planner has chosen,
because that helps explain
his or her behavior. We ei-
ther get a commission to sell
you a financial product, or
we charge an asset-based
fee—typically 1 percent an-
nually of the assets you let
us manage.
Commissions can range
from a recurring annual fee
of 1 percent for some kinds
of mutual funds to as high as 10 percent for certain an-
nuities. If we sell you a $100,000 annuity with a 10 percent
commission, we get a $10,000 check. You can’t see this
Pick winning
investments to beat
the market.
Build wealth
without risk.
Let you in on any
deal that looks too
good to be true.
What planners
can’t do for you

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