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Dear Rob: 'Am I headed for financial ruin?' Add to ...

Financial advisers

Clifford: I have recently inherited a large amount of money. One decision seems obvious, maximize the unused portion of my RRSP. I have no debt to retire. Where would I find the best resources to maximize my return? Should I find an independent for fee advisor, a tax account, read books and go it alone?

Rob Carrick: Clifford, as far as I'm concerned you have answered your own question. Find an independent fee-only adviser. If more people like you knew enough to ask for fee-only advisers, the world would be a better place. Here's why. Most financial advisers are paid commissions and fees related to the sale of investments. This means there are conflicts in the advice they provide - are they putting their own compensation ahead of the client's needs? Yes, this absolutely, definitely and most certainly happens in some cases (not all - let's be clear on that). Fee-only advisers charge you either a flat fee or hourly fee to assess your situation and then come up with a comprehensive written plan to address it. Taxes, estate planning, debt, retirement saving, educational costs for kids or grandchildren - all of this should be part of the package of unbiased analysis you get. That's why I think one of these fee-only advisers would be perfect for your situation, Clifford. You have a great opportunity with your inheritance and, with some good advice, you can get maximum value.

Marianne: Rob, I'm really interested in finding a fee-only financial planner (as per Clifford's question earlier) but don't know where to start. I've had some rotten advice from so-called professionals in the past. Any tips for finding a GOOD planner?

Rob Carrick: Marianne, it beats me why fee-only planners don't develop their own mini industry association and set up a website with a search engine to help investors such as yourself find unbiased financial advice. While we wait for these planners to develop some business sense, let me provide a link that may help you with your search. http://www.canadianbusiness.com/my_money/planning/article.jsp?content=20080310_110229_7096 Let's remember that working on a fee-only basis (that's a flat fee or an hourly rate, no commissions on the selling of investments) is no guarantee you've got an adviser who is right for you. Before you sign on, set up an interview to find out what the rate are, what kind of a financial plan you'll get, how often it will be reviewed, what the adviser's credentials are. Then, ask for a reference of two. Any good adviser will have them ready. Best of luck with your search. There are good advisers out there -- you just have to find one.

Another Dan: Rob, I have a meeting with my financial advisor at one of the big 5 banks coming up. He continually suggests the banks branded mutual funds for me to invest in, often with MER's in excess of 2.3%. Should I continue to heed his advice or time to venture out for a fee-only advisor to give me some unbiased advice?

Rob Carrick: Dan, to me this is the classic argument for fee-only financial advice. Your adviser works for a bank and keeps recommending the bank's funds. Certainly, your adviser and his bank will be happy with this arrangement. But what about you? How do you know you're getting the best possible funds recommended for your portfolio? Frankly, many bank funds are just fine. But no company does all sectors well. Ideally, you'd want to cherry pick the best funds from a few fund families. If your adviser isn't doing this, ask why. Then, ask to see the fees for each of the funds you own compared to category averages, and to the largest and best-performing funds in each category (takes 2 minutes using Globefund.com). Should you stay with this adviser or flee? Can't make that call for you, but I can suggest you get all the facts so you can make a smart assessment.

Rule of thumb

Rob Carrick: Thanks for tuning in, everyone. Great questions today. One of my big personal finance rules of thumb: ask questions - lots of them. Keep it up, whether through me, other Globe writers or your financial adviser.

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