Planning for your financial future? Give your plans a boost with information tailored for you
Start Choosing Here »

Why Your Financial Planner Isn't Giving You the Advice You Want


Financial PlannerMost people could really use some help managing their finances, yet relatively few seek the services of professional financial planners. And here's on reason why: Those pros typically aren't focusing on what the average client really wants.

A recent article from professors Thomas Warschauer and Donald Sciglimpaglia in the Financial Services Review sheds some light on the disconnect between financial planners and their clients. The professors surveyed several hundred people across the country to see which financial planning services they valued most highly -- and the results reveal what could be seen as a failure of the profession to address clients' core needs.

Don't Sell Me Anything

Many financial planners center their advice around their clients' investment portfolios, working hard to put together detailed investment strategies. Because most of them collect their fees based on assets under management or commissions from investment sales, that focus on investing seems natural.

Yet the study found that in general, people want services that emphasize protection and financial security more than investment-related advice.

By far, the service that was most highly valued was help ensure that people have a large enough emergency fund to handle unexpected financial hardships. Legal protection through trusts and powers of attorney was the second most-valued service, while protecting against disability and health-related expenses rounded out the top three.

Am I Overexposed?

Even within the investing realm, the highest-value services are far more general in scope than many financial planners provide.

The study found that clients most want to know whether they're adequately diversified and have investments that will meet their financial goals and income needs. They put far less value on specific investment recommendations that seek to time the market or outperform market benchmarks. Even assessing risk levels isn't viewed as being as important as getting an overall assessment of financial health.

On the other hand, clients simply aren't willing to pay much for comprehensive advice. The study found that fewer than one in five people would pay $500 for financial planning services, with only one in 20 being willing to pony up $1,000 or more.

Ask for What You Need

If you want financial planning advice, it's essential to understand that financial planners have to make a living. As long as they rely on fees from investment products for their income, they'll overemphasize investing advice. To get the advice you want, talk with your financial planner about the best way to pay for it.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger.

Increase your money and finance knowledge from home

Economics 101

Intro to economics. But fun.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

I\'m a two time looser with so called finacial advisors. Shame on me for not learning the first time. I\'m very conservative, a little interest in safe investments is better than sleepless nights concerned what the market will do.
If the world economy stablizes and the economy improves I might venture out of the box a little. Meantime I sleep good, not concerned about Wall Street. The elevator goes up, it also goes down and I\'m very kean on rolling the dice.

February 26 2013 at 12:20 PM Report abuse rate up rate down Reply

I'm a two time looser with so called financial advisors. Shame on me I didn't learn the first time. I'm very conservative, satisfied with less return that's safe. When and if the market stablizes and the world economy picks up I might venure out of the box a little. If that doesn't happen any time soon, fine, I'll still be able to get a good nights sleep.

February 26 2013 at 12:10 PM Report abuse rate up rate down Reply

My financial investment advisor was/is a crook. He scammed and stole from his clients, mostly elderly. Why not? Accountability for his crimes was difficult to prosecute and a nightmare to prove. In the end, he got fined and a slap on the wrist. By filing bankruptcy he ended up with everything - tax free. If I pursue him, I will get arrested. I will never use an investment advisor again.

February 26 2013 at 10:41 AM Report abuse rate up rate down Reply
P S Duesterdick

People are not willing to pay, directly as opposed to indirectly (commissions, management fees, etc) for competent advice in this area and frankly working with the middle to upper middle class is not very productive because they have, in general, violated the most basic rule: They don't save any money. The second they get extra cash, they buy bigger houses, more expensive cars or take expensive vacations as opposed to saving for the future.
And when their children turn 17 and are in their junior year of high school, their parent's start rearranging the ownership of assets so as to try and fool the financial aid offices of colleges into believing that their children are more deserving of financial assistance. When I used to say to clients: "At what point between when you were bringing your son/daughter home from the hospital following the birth and today did it dawn on you that you should be saving for their education?" I would get blank stares. Everyone wants a newer and more luxurious car today as opposed to saving for the future and frankly our education leaders, in the aggregate, have done a LOUSY job of including basic finance and economics in the high school education curriculum.

the other consequence of a "wealth redistribution" policy like the current administration favors is that citizens placed too much reliance on government to support them for bad decision making and eventually the masses will find out that counting on "taxing the rich" is not going to cover the increasing financial dependence of tens of millions of citizens (I would be tempted to call them "taxpayers" but many of them are not even that!) on a federal government that has shown little understanding of the problem. That's when it is going to get really ugly in America--watch Greece today for the coming attractions!

February 26 2013 at 9:45 AM Report abuse +1 rate up rate down Reply

When the market rises they all seem to be geniuses, when it goes down they are at a loss. It does not take a great deal of ability to be a financial planner just to know some rudimentary things about investments and be able to execute a trade.

February 25 2013 at 10:48 PM Report abuse +2 rate up rate down Reply
1 reply to Davie2743's comment

They are coming for your 401k's and pensions. They will force you into treasuries. 19 trillion in pensions and 401k's and hey are salivating and exploring how to legally take it. Right now ts the propaganda stage , you are not smart enough to swim in the water with all the sharks. Soon it will be mandatory. Argentina part duex. Post the comment censors

February 26 2013 at 12:47 AM Report abuse +1 rate up rate down Reply

I was once a financial planner and worked for a very reputable company in business since the 19th century. This company utilized a four cornerstone approach to insure safe long term results. My clients successes led to many referrals. I was recruited by a new up and coming brokerage house promising both me and my clients more successful results. In reality, the new outfit was mostly concerned with making money for the brokerage house. My clients lost money, I lost my reputation. Both of these firms remain major players some thirty years later.

February 25 2013 at 7:37 PM Report abuse +2 rate up rate down Reply

Best financial advice ever: Save more money so you can retire.

February 25 2013 at 7:05 PM Report abuse +2 rate up rate down Reply
Carl Mayer

The industry is bogus. Thet use a cookie cutter approach via a computer program.

February 25 2013 at 6:15 PM Report abuse +1 rate up rate down Reply

You don't get the advice you need because they profit from your following their advice, so they give the advice most beneficial to them.

February 25 2013 at 6:00 PM Report abuse +1 rate up rate down Reply

Think of Financial Planners this way.
If they where very good they would be making a lot of money for themselves and have no time for you and I.

February 25 2013 at 5:36 PM Report abuse -1 rate up rate down Reply