the recent 20 percent plunge in the global stock market,
individuals have been second-guessing themselves,
wondering if they are handling their money right or
whether their financial advisers are up to the job.
Gjertsen II, a Chicago-area financial planner with Mack
Investment Securities and chairman of the nationís
largest organization of certified financial planners,
says people badly judge what financial planners can do
for them. He says financial planners are given too much
credit for gains when the stock market is climbing, and
blamed inappropriately for losses during periods like
early this year.
urges people to be more careful, however, about whom to
trust. As chairman of the Financial Planning
Association, and previously president, he has called on
the federal government for more regulation of financial
consultants so people are not led astray by salespeople
posing as financial planners.
The Department of Labor says itís close to setting a
"fiduciary standard" the Financial Planning
Association says is essential so people know whom they
can trust with their money. What does your organization
We are aligned with consumer groups. We want advisers to
be contractually obligated to have the best interest of
their clients at heart.
Some people are going to be shocked that you need a
contract for that. They assume that when they get some
type of financial advice, the broker, financial planner,
wealth manager or consultant will have their best
interest at heart. Are they wrong?
They are wrong, and the consumer shouldnít have to
figure out if someone is going to have their best
interest in mind. If I have two products for a client,
and one is going to give me 8 percent in commissions and
another only 4 percent, if the 4 percent is a little
better product I should be selling the 4 percent rather
than selling the 8 percent because I have a personal
I tell my readers to ask advisers about all fees ó
those obvious and those hidden whether buying mutual
funds, annuities or any investment. When they do, the
consultant often tells them not to worry about it
because they arenít paying anything.
In that case, people should think twice about buying.
You should ask the person selling: How much do you get
paid for this one and that one? If they say you arenít
paying anything and donít worry about it, that person
may not have your best interest at heart because why
should that be a secret?
Iíve been writing about the attempt to get a fiduciary
standard in place for years. Why hasnít it happened
Thereís a lot of lobbying by groups that donít want
the standard. It befuddles me that congressmen wouldnít
look out for the best interest of their constituents.
What should a person be able to get from a good
financial planner? Some people have looked at their
401(k) recently and noticed theyíve lost a lot of
money. Can a financial planner keep you from losing
money in a bear market?
A financial planner has no control over the markets. The
only thing we can control is the financial plan and the
amount of risk for a client. If you go to a financial
planner and all they want to talk about are your
investments, they are giving you investment advice and
not financial advice.
Whatís wrong with that?
Nothing, but financial advice is about goals and helping
people attain those goals. If a person needs more cash
flow I could say refinance your mortgage. This has
nothing to do with actual investments, but it does have
to do with the clientís wherewithal. The client might
have a high credit card debt, so instead of putting the
client into an IRA I can guarantee a client a 12 percent
return if they pay off the card, because thatís what
the credit card has been charging. And this is where the
true fiduciary standard comes in. As a certified
financial planner, as a fiduciary, I guide you to pay
off your credit card, or pay down your mortgage, and I
donít get paid for your assets. At the end of the day
itís about whatís in your best financial interest.
People often go to financial planners when they think
they need help with investments.
Investments are more highly valued by the client than
financial advice, but thatís backward. If I can get
the person to get on a spending plan ó where you know
where your money is going ó you may be able to put
more in your 401(k). If you rely on investments and your
returns arenít enough to beat your spending, youíre
What should people expect to pay for a financial plan?
That depends on how sophisticated the plan is. If itís
for someone with a 401(k) and not a lot of complexity,
it may be $1,500 to $2,000. But if the individual has
complexity like partnerships and a lot of trusts to
review with attorneys, thatís going to be more.
So could someone come to you, just get a plan, pay
$1,500 and be on his or her way?
Yes. Clients come in with funds at Vanguard and are very
happy with them. Why should I disrupt that? Theyíre
just looking for guidance, so Iíll figure goals they
want to get to and give them suggestions on current
allocations of assets. We wonít manage the
investments. The trouble is people think they are going
to a financial planner for guidance, but they are just
Can a person go for just a few hours of advice? Iíve
suggested this to readers, but then they look for a
planner who will just charge an hourly fee, and they canít
It may take a little longer to find, but itís out
there. I go to local public libraries with other
financial planners and give free financial planning. For
clients under 36, without large investments yet, some
planners charge on an hourly basis for advice rather
than managing assets.
I suggest people interview three financial planners
before selecting one. What should planners be asked?
Anyone can call themselves a financial planner. You
should ask: Are you a fiduciary? ó so theyíll put
your interests first. To get a "certified financial
planner" designation, CFP, you have been required
to take a very challenging test. If they donít have a
CFP, and name some other credential, ask if that
credential could be taken away from them. Many of the
titles sound neat, but they donít mean anything.
People can buy credentials. But with the CFP, there are
rules. If I donít explain my fees honestly, theyíre
going to take my credential away. Also use "broker
check" (brokercheck.finra.org) to see if the person
has been in trouble. Donít be persuaded by a good
sales pitch. The individuals without any license are the
most dangerous because they are the most persuasive.