Which would you rather hear from your financial advisor?

  • This?: "Retire at 45? Sure! Let's make it happen!"
  • Or this?: "There are two ways to realistically achieve your financial goal: Increase your annual savings 25% (cutting your spending, downsizing, or other means), or add five to 10 years to your time frame."

Fudging the truth is fine when discussing your best friend's new hairdo, nephew's orchestral debut, or the "delicious" pot roast your in-laws brought over for the potluck. But in matters of money, you should seek nothing but the whole truth from any financial professional you hire.

The problem is, brutal honesty can be bad for business depending on the type of advisor you hire.

Tough love is so hard to find
It's harder than you might think to find a professional money advisor who isn't more concerned with sparing your feelings than speaking plainly about what it's going to take to set your finances straight.

So instead of telling a potential client that their finances are a disaster, that their dreams are way out of whack with reality, they instead pussyfoot around the problem. For example, they might try to "solve" it with inappropriate recommendations that only enrich them (by padding their commission checks), or discuss the reality in such couched terms that the customer fails to get the message.

How to tell if your advisor is lame
In 2006, our resident retirement expert, Robert Brokamp, sat down with financial planner Sheryl Garrett, an outspoken advocate for individual investors (even when it ruffles her peers' feathers) who has testified on the Hill about predatory lending regulation, financial literacy, and Social Security reform.

But Garrett doesn't just pay lip service to greater transparency in her industry. In 2000 she created the Garrett Planning Network as an alternative to the conflict-riddled, commission-based field of financial advice. The fee-only planners (whom Garrett personally vets) offer pay-as-you-go, as-needed financial planning advice, giving customers the option of seeing a financial planning pro once, periodically, or on an ongoing basis.

So who better to pull back the curtain and point out the tricks of her trade? Here are excerpts from the conversation.

1. You'd be better off spending your money than investing it with me.
"The most significant asset most of us have is our ability to earn an income. The conventional financial services mentality focuses on protecting that income with life insurance and disability insurance. But what about investing to further your earning potential? What about investing in job coaching or career training? This is a conversation that should come out of the financial planning process."

"A woman in her mid-50s approached me at a book signing and said, 'I have got about $55,000 and make just $13,000 a year. What should I do with it to help me to be able to retire in a few years?' So I found out more about what she is doing right now, and come to find out she is working in social services, really in a part-time capacity, and she'd love to do more. I said, 'What would you really like to do in life?' She said, 'I have always wanted to be a nurse.' So we ran the numbers and came to the conclusion that the best investment she could make with that $55,000 would be to spend it on a nursing degree -- to invest it in her career and her earning potential and her love and passion. Now the woman has a higher income and a new career she can enjoy well into traditional retirement age."

(Are you in a similar predicament? Find out what options you have in " Oops, I Forgot to Save for Retirement .")

2. It's either your kids' dreams or yours. Sorry, kiddos.
"The majority of baby boomers don't have their own financial situation in good enough shape to be paying for kids' college. Yet so many parents pledge to their children, 'Hey, if you make the grades and get in, mom and I will take care of paying for college.' And there is nothing like breaking a promise to your child to break your heart. But, for the sake of the rest of your financial household, you need to make sure to take care of yourself first."

"There is no such thing as financial aid in retirement. I encourage parents to strongly consider having Junior take out loans (and if you need to take out loans ... to cover the tuition, that's fine, too). And there is nothing at all wrong with junior college or a state university. In most professions, what matters is having a degree -- not where it's from."

(Don't feel guilty about putting your needs first. " Should You Save for College or Retirement? " points out how everyone's better off if you take care of No. 1 first.)

3. If you die tomorrow your legacy will be a big fat financial headache.
"Getting a will done is probably one of the easiest things to procrastinate on because we would like to think we won't need it for a long, long, long time. Plus the concept of estate planning feels negative.

"Well, quit being ignorant. You are not invincible. When death occurs, it is a very, very traumatic thing on the surviving family. Don't make it worse by not taking care of your financial affairs ahead of time.

"Estate planning is a gift that you give to your loved ones. So give your spouse and family members the gift of taking care of things like life insurance, wills, beneficiary information in advance. Take the financial and emotional burden off your family and your survivors. If you don't, you are going to put them through living hell at some point in the future."

(Are you prepared to die (paperwork-prepared, that is)? See " How Not to Be a Burden to Your Family " to give your loved ones the gift of peace of mind.)

Is your advisor lame?
Whether you're currently seeing a financial pro or looking to hire one, it's important to know how to spot the difference between advice that is good for you and recommendations that serve to enrich your advisor. Here are more resources to help you do just that:

Dayana Yochim sent her parents to the Garrett Planning Network shortly after it debuted. And, that whole bit about cutting her brother out of the will? She was only joking! Really! The Fool's disclosure is a contingent of a contingent's contingent beneficiary.