Picking the Right Planner

Working single mom Kathy A. Gambrell has had no problem finding a lawyer to write her will or a certified public accountant to prepare her taxes -- professionals she found by asking friends and family for recommendations.

But a four-year quest to find a financial planner has left the editor of the District-based CongressDaily baffled, angry and, worst of all, unenlightened on how to find someone good to help her manage her money. Three weeks ago, she fired her latest adviser after he recommended she quit her job, fire her babysitter and yank her child from Montessori school -- then let him manage the money she would save, along with a small inheritance she's about to receive.

"As if!" says Gambrell, 46. "He had no idea what I was about."

Many people are comfortable handling their own investments. But many others, such as Gambrell, lack the time, expertise or inclination to go it alone. Unfortunately, finding the right adviser can seem as confusing as trying to navigate the complex world of financial investments did in the first place.

Much of what makes hiring a financial planner so bewildering is the motley nature of the industry. There are more than 80 certifications or degrees advisers can place next to their names. Most were created since the 1980s, when financial planning came into its own, but only a few carry widespread recognition.

"It's a joke," says Ellen Turf, chief executive of the National Association of Personal Financial Advisors, an industry trade group. "Our goal is to have financial planning be a profession, but it's not quite there yet. We don't have a system like doctors or lawyers or accountants, where you know what to look for."

The absence of a uniform industry standard means that consumers must do their homework before they hire anyone. Experts say it is essential to know whether a prospective adviser accepts commissions that could influence which products he recommends. And equally important: Consumers should also ask whether that adviser is the kind that by law must put his client's profit ahead of his own. And consumers should check with federal and state regulators to see if that adviser has registered and whether he has been the subject of any recent complaints or disciplinary actions.

Planning for the Times

Once a service aimed primarily at wealthy families, financial planning has gone mainstream as the number of people invested in the stock market has grown, experts say. Fifty percent of households today have a stake in the market, compared with 19 percent in 1983, according to the Employee Benefit Research Institute.

At the same time, workers increasingly must shoulder a greater responsibility for managing their retirement savings. More companies have shifted away from traditional pensions, known as defined-benefit plans, where workers are promised a specified monthly amount at retirement based on their salary and years of service. Instead, companies have shifted to defined-contribution plans -- the 401(k) is the best known -- where an employee and often the company contribute specified amounts from each paycheck to a savings plan. That money is invested in mutual funds or other investments, as directed by the employee, who then gets the pool of money at retirement, whatever it is worth at the time.

The pension reform law signed by President Bush this month will likely spur the trend because it provides for companies to start enrolling new employees in 401(k) plans automatically, unless the worker specifically opts out. And it will complicate choices for many workers because it allows investment firms that manage 401(k) plans for companies to also advise individual employees on how to invest that money.

For all these reasons, more people than ever are seeking professional advice on meeting their financial goals, and they come from all stages of life: a college graduate at his first job facing decisions about a 401(k) plan, new parents wanting to start a college fund, newlyweds deciding whose health plan and other insurance policies to cancel, an older worker uncertain if she can afford to retire, retirees intending to pay for grandchildren's college.

Many people say it simply boils down to a question of time. Rosanne Greco, a retired military intelligence officer who lives in Bowie, says she turned to a financial planner because she was too busy with work to sufficiently research what she should be doing. "I had been investing for years, but I didn't know what I was doing," she says. "I didn't have time, being in the military and traveling all over the world."