If you want money advice you can trust, your best bet is to hire a fee-only financial planner. The trick is finding a planner who is willing to be hired for a reasonable fee.
Fee-only planners don't accept commissions or kickbacks and are paid solely by client fees. Most use an "assets under management" model where they manage their clients' investments and charge an annual fee of about 1 percent.
To make the math work, these financial planners usually require people to have hundreds of thousands of dollars to invest. Otherwise the advisers would reap too little from their fees to justify the hours spent creating financial plans.
This is obviously a problem for people who don't have enough assets. It also can be a problem for those who do, since the advisers collect their fees year in and year out, regardless of how much advice they're actually dispensing. Plus, not everyone wants or needs an adviser to invest their money.
It's even becoming a problem for the planners themselves. A client with a small portfolio may have more complex needs, and require more time, than one with a larger portfolio, but the fees won't reflect that.
Plus, what these planners are technically charging for — investment management — can be had for much less from robo-advisers. These digital investment services use computer algorithms to invest and typically charge one-quarter of 1 percent.
Planners are essentially giving away the valuable part of what they do, the financial advice, while charging premium prices for the commodity that a machine can essentially do for much less.
Advisers increasingly are recognizing the flaws in this approach and some are exploring alternatives, such as charging flat monthly or quarterly fees, says financial journalist Bob Veres, owner of Inside Information, a site for advisers.