Abuses and conflicts of interests are endemic to the trillion-dollar financial planning industry, making the selection process more difficult. The field receives little governmental scrutiny and credentials are difficult to evaluate. While more than 200,000 individuals call themselves planners, only about 40,000 have ever completed course work.

Every year, self-described planners or advisors produce customer losses of at least $300 million. While the industry is rapidly growing, the Securities and Exchange Commission hasn't substantially increased the number of inspectors. Fraud often goes undiscovered even unreported by investors too embarrassed to admit their mistake.

Three Types of Planners

Today, investors have three choices when shopping for a financial planner:

1. Fee Only Planners. This group charges an annual fee or, in special situations, an hourly rate. Fees start at about $150 and progress to more than $300 per hour. Most Fee Only planners also manage assets in no-load mutual funds and a variety of fixed income investments for an annual fee of 1% and up of assets under management. Ancona Financial Advisors falls in this category.
2. Hybrid Planners. These planners charge a flat fee for planning and commissions for any investments or insurance purchased through them. They may profess to be "Fee Only" or the ambiguous "Fee-Based", but their version of "Fee Only" may not meet professional standards.
3. Commission Only Planners. Be wary of this group. Like brokers, they have a vested interest in selling particular investments for commissions.

Although they can be more expensive, Fee Only planners are the only choice if you want a totally objective planner who sits on your side of the table. With Fee Only planners, you're assured that they're not selling for a mutual fund family, insurance company or bank.

Fee Only financial advisors work solely for their clients and are compensated only by a previously agreed upon fee. Therefore, they can be completely objective in their evaluation and can recommend a course of action based only on strategic financial considerations. Fee Only advisors do not accept commissions or receive any other compensation for recommending specific products. They simply develop and implement a plan that shows clients how to attain their financial goals. The result is an unbiased overview by professionals who are working solely for their clients.

In determining what type of Fee Only financial advisor might work best for you, consider those that belong to NAPFA, a professional organization with high membership standards. For example, all NAPFA members must have demonstrated their ability to provide sophisticated comprehensive financial planning. Specific requirements include: 1) compliance with federal and state investment advisor regulations; 2) advanced education in the field or other related credentials; 3) significant professional experience; 4) peer review of a comprehensive plan; 5) extensive continuing education.

Endorsement of NAPFA planners has been received from the AARP, the Consumer Federation of America and state regulators. Several financial publications have also recognized the value of Fee Only financial planning.

Newsweek - Jane Bryant Quinn: "Financial Planners who take commissions have a built in conflict of interest…even with disclosure, my choice would be
a fee only planner."

Money Magazine - "Start with the general practitioner…a Financial Planner whose compensation should be from fees alone."

Forbes - "The most important matter is how the planner is compensated. Hire the planner who…has no financial stake in your investments."