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By lurkingforacure On 2009.08.21 21:11
I have a general question about financial planners. This week my husband had a really bad day and it really scared him. Unknown to me, he called a financial planner who does all the financial planning for his business co-owner. I see a conflict of interest, he said it's fine, the guy assured him he keeps everything confidential. I have my doubts but am keeping my mouth shut, for now.

My husband actually had a meeting with this planner the day after he called (I think business must be really slow for him to be able to see him the day after he called, another reason I am concerned). They met, and my husband told him verbally pretty much our entire financial situation. The planner knows my husband has PD.

My husband has told him I have to be on the same page and so a meeting has been set up in several days so I can be present when "we go over" our "financial situation" and see "what all" they can do for us. We have two very young kids and in this market, I am really not interested in doing any investing. What little money we have we need for our kids' activities now, for college later, and any uninsured medical expenses we may face.

My questions are pretty basic and are these:

what exactly does a financial planner do? my concern is that they are mostly salesman and I am not interested in putting any of our hard-earned money at risk given our circumstances, as well as the current economy...

if we are not going to give this guy any money to invest, what can he do for us?

I feel I should know this but don't. Has anyone had any experience with these guys and what they do? I am really nervous about this meeting and am feeling pressure already. Thanks.

By WitsEnd On 2009.08.24 14:29
Most of them give advice. I definitely would not give one money to invest personally. How is the person going to get paid for their services is a key question.

The type advice most financial planners give include:

1 - Longer term investments generally provide higher yield. This is offset by liquidity, inflation and other risks associated with longer term investments. Based on your retirement horizon or cash needs an advisor will provide information about investment opportunities.

2 - Higher risks usually means higher yield. They will recommend a balance probably of stock, bonds, commodities, etc. Typically they base this on age and when money is needed. Theoretically it is "okay" to have a higher risk portfolio if your retirement horizon is 20 years vs. 2 years. Any losses can be recouped with a longer horizon and the higher yield increases wealth.

2 - Some provide tax information too. Some investments for instance are AMT exempt. Some will provide guidance about family trusts or other vehicles to minimize tax and shelter income.

My background is finance and there's a theory for everything--some of which contradict others. The best advise is to diversify (don't pull all your eggs into one basket). Buy things you know and are familiar with....and remember that if the people who give advice were truly brilliant financial wizards who could do no wrong they probably wouldn't be working still......they would be retired, fat and happy.
And last but not least....going to your mama used to say you shouldn't play with anything you can't afford to lose.
In the meantime I would recommend doing a little research on the internet and with licensing authorities to see if the guy is legitimate and be careful about what personal information I shared without knowing for sure the guy is legit.

By lurkingforacure On 2009.08.24 20:38
Thank you, that is very reassuring. Oddly, my husband has a double degree, one of which is finance, like you, so he knows what's going on. I think he just got really scared when he had that particularly horrible day and of course when you are scared you act spontaneously. And these salesmen can sense that and there you are.

One of my friends (no PD connection, the lucky girl) told me they had invested in stocks, funds, etc. and lost a lot, like many have....she said they sat down recently and did some calculations and figured that if they had simply put their money in a bank account earning modest interest, that they would actually have more now than they do, because all the gains they made they have lost, like so many. So what if they got 15% return, when it all got zeroed out (and then some, they even lost some principal) when the market started going south. They pulled out of everything, took the losses, and now have their money in plain old bank accounts, boring, but safe. I think with our situation that's a good lead to follow. Thanks for your comments.

By susger8 On 2009.08.29 10:24
I have two financial planners. One manages my IRA and other investments. He is keeping a lot of my assets in cash because he feels the market is still too volatile to get back into buying funds, etc. He is expecting a lot of inflation in the near future. He seems to know what he's talking about.

The other guy is a "wholistic" planner. He has been really helpful, because he advises me on what insurance I should have, how to consolidate my dad's accounts, what to sell first when dad is getting low on cash, estate planning, gifting, trusts, all kinds of stuff. I found him through a friend. I don't know how to find someone like that otherwise.

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