At a meetup today, several people were sharing how frustrating it has been to find a good financial planner. And I totally get it. Finding good professional help is tough in any industry, but it is especially challenging in personal finance where many people lack confidence, the terminology is intentionally confusing, and the incentives are often stacked against the client. The fundamental dichotomy is this: if you know enough to find the right professional and ask the right questions, you probably don’t need them. After all, for most people, personal finance isn’t actually all that complicated.

How Planners Get Paid

At its core, financial planning is a service business. The planner wants to make money, and the client wants to pay as little as possible. That tension has created a whole menu of compensation models and, sadly, some of them are far better for the planner than for you.

Commission-Based “Advisors.” These are the people who only get paid when they sell you something and, on first glance, they look the cheapest because they don’t charge you anything!  Their incentive is to earn the biggest possible commission, not to grow your wealth. Teachers have been especially vulnerable here, with high-fee annuities shoved into 403(b) plans. Early in my career, I fell for this. A commission-based advisor showed up at school and filled my portfolio with variable annuity products that sounded great but were really designed to pay him. It cost me years of growth and some expensive surrender fees to get out. I learned quickly: if someone is being paid to sell you something, expect them to sell you something, whether you need it or not.

Assets Under Management (AUM). – Another common model that is slightly less problematic is charging a percentage of your portfolio, usually around one percent. That sounds small, but on a $500,000 portfolio it’s $5,000 every year — $100,000 over twenty years, not even counting the lost growth. I ran the math once and realized that one percent shaved off my returns was the equivalent of buying a luxury vacation every year, but for the planner instead of me and my family.

Subscription Services. – A newer option is paying a flat monthly or annual subscription for access and advice. This makes costs predictable and avoids the commission/AUM conflict. The downside is inconsistency.  Not all services are equally strong, and if you don’t use them often, you end up paying for more than you need. Still, for busy seasons of life, it can be a good fit.

Fee-Only, Project-Based. – My favorite option is hiring planners for specific projects. I’ve done this myself (once for retirement withdrawal strategies, another time to check my work on tax optimization strategies). It felt good to pay for exactly what I needed, get an expert’s input, and move on without strings attached. An added bonus is the “checks and balances” inherent in having different professionals review my situation rather than relying on, and trusting, a single generalist.

One important detail: always ask if the planner is a fiduciary. Fiduciaries are legally required to put your interests first. Advisors working under the weaker “suitability” standard can recommend products that are “good enough” for you but excellent for their paycheck.

My Takeaway

I sat down and learned a lot of this stuff on my own before I discovered the financial independence movement, but this is where the FI community has really helped me.  FI encourages people to educate themselves and provides resources and a community to do so.   The more you know, the less you have to rely on expensive intermediaries and the less vulnerable you are to being taken advantage of.  I still DIY most of my finances but occasionally bring in experts for a second opinion. The peace of mind is worth it for me (and even more so for Katie).

I do worry about friends and relatives who aren’t interested in personal finance and don’t take the time to learn. The hard truth is that finding a good planner is difficult, not because ethical professionals don’t exist, but because the ones who profit most can afford to have the biggest marketing budgets, fanciest offices, and show up on the first page of Google searches. If you’re impressed by a sharp suit, a fancy lobby, or free swag, stop and ask yourself how it’s being paid for. Spoiler: it comes from clients.

The more you educate yourself, the easier it is to cut through the noise. A few simple questions can help: How do you get paid? Are you a fiduciary at all times? What services do you provide, and what will they cost in total? If someone can’t answer clearly, don’t just walk away.  Run!  After all, whether you manage things yourself, lean on community resources, or hire fee-only experts for targeted needs, the goal is the same: make sure your money is working for you, not for your planner’s commission check.

Has anyone found a good solution to financial planning?