Finding an Advisor, II
Adventures in shopping for a financial planner

by Barbara Eisner Bayer (TMF Venus)

WOODSTOCK, NY (July 27, 1999) -- As much as we would like to believe otherwise, there are very few guarantees in life. A media weatherperson says the heat wave will break in 5 days. Then, poof! You change the channel, only to discover you MAY have another 2 weeks of heat, as there is no relief in sight. For months you were guaranteed that on Tuesdays, you would be entertained, amused, and enriched by Chris Rugaber's Foolish Four columns. Then, poof! One day he's replaced by a human planet. The only guarantee is that there are no guarantees.

Sure you can get short-term guarantees. Appliances for one year, cars for 36,000 miles, and stocks that drop the minute you purchase them. (Hey, that's a joke.)

Life's unpredictability is exactly why an approach like the Foolish Four is so vital to investment portfolios. Backtested for more than 25 years and returning a yearly average in excess of 20% makes it a desirable staple. And because it only demands 15-30 minutes a year of investor time and brainpower, it's guaranteed not to distract you from the important things: life, liberty, and the pursuit of air-conditioning.

"Experience keeps a dear school, but fools will learn in no other."
Benjamin Franklin

I was intrigued by Ann Coleman's column last week entitled "Finding a Good Financial Planner." For new investors, or individuals who have recently received a windfall due to inheritance, divorce, or death, a planner can be a valuable asset for designing an overall financial plan. Sure it's preferable to manage money on your own; but while one's learning the basics, it's often helpful to have someone else design the landscape until you are knowledgeable enough to become your own gardener.

Coincidentally, a recently divorced friend approached me for help with managing her money. I tried to inspire her to do it herself, but she was too overwhelmed from juggling two rapidly growing sons and developing a new career. So we set off to find a financial planner who could help.

Last week, Ann said, "The best way to find a good financial planner is probably word of mouth." So we asked our friends and came up with an assortment of names. Kind of like with chocolates, we figured we'd bite into each one until we found the one with the tastiest center.

Having a sweet tooth for financial freedom, I submitted a name as well. Several years ago, before finding Foolishness, I took a class entitled "Managing Your Money" (what else?) taught by a local Certified Financial Planner. I had been impressed by his honesty and integrity -- and the free one-hour consult he gave to everyone who took his class. My friend made an appointment to see him.

If your acquaintances don't have any suggestions, don't despair. You could always check the yellow pages under Financial Planners. Alternatively, a listing of CFPs in any area may be found at Virtually all CFPs will see you for the first hour without charge. Very cool. In that hour, you can explain your needs, determine how the planner gets paid (i.e. fee-only or commission) and the potential cost, and then decide to use them or not. It's a win/win situation.

We set up an appointment with our CFP who I'll call Mr. G. On the drive over for her free one-hour consultation, I briefed my friend on the questions she needed to ask, stressing the most important thing she must do: LISTEN! It's so easy to forget that, especially when we are insecure or conscious of our ignorance; but by forcing ourselves to listen, we can quell our fears and integrate the knowledge being offered.

Because she had already created a list of questions and needs, my friend eloquently stated her case. Mr. G listened intently -- listening works on both sides -- and then took out a calculator and began doing some preliminary numbers. He quickly determined that she would be able to achieve her financial goals; the next step was to determine the correct path.

Mr. G strongly recommended a course of mutual funds. RED ALERT, RED ALERT! Luckily my friend brought along her Foolish police officer, who at the first sign of unFoolishness was ready to go to combat. Turns out that Mr. G supported mutual funds NOT because he was getting a commission, but because he felt he was a poor stock picker and felt more secure with long-term money managers. (To his credit, the funds he recommended were managed by folks who had been in the business more than 25 years and had pretty decent returns.)

We were unable to settle our debate on index funds vs. mutual funds, but each person, Fool or not, is entitled to his or her opinion, and it's not my mission in life to change the world. Even if I do incessantly try.

He also discussed with her what other potential money managers she had spoken to. At that point, he suggested that if she wanted to invest in individual stocks, a different money manager might better suit her needs. In addition, he offered to review any plans others designed for her and give professional counsel when she needed it.

We left feeling we had accomplished our goals. Mr. G would be there to review and oversee her portfolio, and she would choose a money manager to handle her investments. She promised me to stay informed about how her account was being managed, and also to try to learn as much about Foolish investing as her schedule permitted.

It was a great learning experience, and all three of us left our meeting enriched, educated, and amused. My friend chose a conservative investment advisor who buys blue chip stocks and holds for the long term. This put my mind to rest. The market will rise, and the market will fall, but it's investing for the long-term, be it in individual stocks or mechanical approaches like the Foolish Four, that will bring the greatest peace of mind over the long term.

That I personally guarantee.

Fool on!

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07/27/99 Close
Stock  Change   Last
CAT  +   1/8   60.13
JPM  +1  1/8   135.50
MMM  -   1/16  88.88
IP   -   3/8   53.63

                  Day    Month   Year   History
        FOOL-4   +0.08%   1.16%  27.23%  29.12%
        DJIA     +1.09%   0.08%  20.36%  19.89%
        S&P 500  +1.12%  -0.72%  11.45%  11.72%
        NASDAQ   +2.30%  -0.24%  22.19%  23.87%

    Rec'd   #  Security     In At       Now    Change

 12/24/98   24 Caterpillar   43.08     60.13    39.57%
 12/24/98    9 JP Morgan    105.51    135.50    28.42%
 12/24/98   22 Int'l Paper   43.55     53.63    23.13%
 12/24/98   14 3M            73.57     88.88    20.80%

    Rec'd   #  Security     In At     Value    Change

 12/24/98   24 Caterpillar 1034.00   1443.00   $409.00
 12/24/98    9 JP Morgan    949.62   1219.50   $269.88
 12/24/98   22 Int'l Paper  958.12   1179.75   $221.63
 12/24/98   14 3M          1030.00   1244.25   $214.25

              Dividends Received      $49.99
                             Cash     $28.26
                            TOTAL   $5164.75