Blind Dates With Financial Advisers

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By Martha M. Hamilton
Sunday, November 5, 2006

Solicitations from folks who want to tidy up my yard, paint my house or do electrical work go straight into the trash when I find them tucked behind the storm door.

Why should I give my money to people I never heard of just because they suggested it?

But, because I'm trying to learn as much as I can about financial planning for retirement, I accepted three recent mail invitations to discuss my retirement savings. One came from an investment company with which I have no association, another from a mutual fund company with which I have an individual retirement account and the third from a bank with which I have no relationship.

Okay, so they were free meetings. I didn't expect anyone to get into intricate details of how to manage my money. What I did expect was that they would try to show me how smart they are about money, the better to persuade me to let them manage mine.

But what I got was minimal, generally run-of-the-mill advice and rote descriptions of the services they offered. And, in two cases, planners offered advice about tax consequences of an IRA vs. a 401(k) that didn't take into account recent changes in the law.

I'm not identifying the firms because I responded to their invitations as an investor, not as a reporter. My interest in talking with them was prompted by the recent change in my financial situation, resulting from taking a buyout offer from The Washington Post in January in order to write this column under contract.

But I think what I learned is worth sharing. Like many of you who have e-mailed me, I'm wondering how to find the right person to help me prepare for the future. It's not just those of us who are near retirement who need a good financial planner, even though we're the ones on whom the industry is focused. As one recent study noted, the retirement market will be the single largest driver of profitability for the financial services industry for the next two decades.

For the meeting with the investment company adviser, I was mailed a 10-page form to fill out. It took me a couple of hours of looking up information and filling in what I could, listing assets, insurance and other facts of my financial life. It probably wasn't a waste of time (I was reminded that I probably should increase the amount of insurance on my house), but I was never asked about the questionnaire during the meeting.

And in that same meeting, the adviser, without saying so outright, made it clear that one of my former Post colleagues was a client. Disclosing relationships with clients is a no-no in the industry.

For the meeting with the mutual fund company, I initially agreed to do it by phone but decided it would be better to do it in person. One thing I wanted to know was how well my longest-term investment had performed over the many years I had held it. The trouble was that the mutual fund company's records didn't go back that far. They indicated I had owned one fund only since 1995, but actually I've owned it much longer. (Later the company supplied additional information.)

The advice offered wasn't bad -- that I should diversify, that I shouldn't own so much Washington Post Co. stock -- but it was obvious. Of the three meetings, however, this was probably the one that came closest to prompting action, because I was looking at my actual investments, not listening to a list of services I might buy.

From my meeting at the bank I learned that a lot of people make these appointments and don't show up, which is rude. I also found out that having the bank manage my money would make more sense if I were a customer of the bank and could use the combined size of my investment accounts and bank accounts to reduce fees.


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© 2006 The Washington Post Company

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