Don’t Feed the Alligators

A Personal Finance Blog from a Small-Scale Landlord’s Perspective
02.13.2008

Rick writes:

“Have you ever used a professional “financial adviser” and what are your thoughts on doing so?”

I have never used a professional financial adviser. But I also personally rarely use professional services for anything else I need, either:

  • I perform all the maintenance and repairs on my cars: timing belts, brakes, struts and shocks, oil changes, etc.
  • I fix and install heating appliances and accessories
  • I planned, purchased, and redid the kitchen in my rental unit
  • I fixed my sprinkler system
  • I rebuilt my railing
  • I have helped family and friends fix well pumps, install ceilings, satellite dishes, move, etc.
  • I do my own taxes

I tend to be a very do-it-yourself kind of guy and managing my money is no different. I do things myself for 3 primary reasons, listed here in no particular order:

  1. I get satisfaction from a job that I have done well.
  2. I don’t trust most of the people whom I would have hired to do all these things.
  3. It has saved me an enormous amount of money.

Before embarking on any of these projects, my first step was to recognize an important fact: I knew little about what I was doing. This meant that I had to do lots of research on the variety of subjects. I had to learn the general principles, I had to learn where and what the pitfalls were, I had to learn what tools were required, and I had to understand the consequences of failing. With all this knowledge in hand, I could determine whether I wanted to tackle the job myself or hire a professional.

With all that being said, the conventional advice about financial advisers is that you should find and hire an adviser who is compensated in a way that is unrelated to the advice that he or she provides. In other words, an adviser who gets a commission on products that he sells to you has an obvious conflict of interest. On the other hand, an adviser who earns an hourly payment regardless of what advice you choose to follow is an independent observer. Since I have never used such a service, I would have no advice myself for finding a qualified financial adviser with no conflict of interest.

I suggest choosing very carefully. Start by asking friends, family, and coworkers for recommendations. Once you get some leads, schedule some interviews. Ask the candidates how they handle their own money. I don’t expect them all to be rich, but they should be on the right track, and I expect they should be able to prove that. Ask for references, then actually call the people on the list. Get to a point where you are absolutely comfortable before turning over your hard earned money to a stranger. This month’s Money Magazine suggests these 4 questions:

  1. What was your biggest mistake over the past 10 years?
  2. Do your financial incentives always line up with my best interests?
  3. How have your clients’ portfolios performed over the past 10 years?
  4. If I wanted to buy a couple of broad index funds or ETFs, which would you recommend?

Click to read the full article.

The principle question that I would ask of myself is, “Why do I think I need professional advice?” Am I in serious debt and need to figure a way out of it? Am I trying to figure out how to save for a down payment on a home? Am I trying to put my kids through college? Are my investments too complicated for me to track and follow? I would start by writing down the reasons I need advice. I have often found the act of putting thought to paper in itself can untangle a good deal of the confusing and sometimes disparate thoughts and ideas that I may have about a particular problem. The single biggest problem that I have with my own financial planning is losing focus on priorities. That’s why it’s good to write down your goals so that when you’re tempted to do something new with money, you go back to your written plan to see where it fits.

Money has become a taboo subject among family and friends in today’s world. Many of us would rather run to (and pay!) a stranger for advice than to ask the people close to us. Our friends and family may not have professional training in finance, but they have certainly studied at the School of Hard Knocks. Sometimes all I’m looking for is a sanity check on whether what I’m doing with my money makes sense, and asking the people around me can provide that very easily in a lot of cases. Throw in a myriad of books on the subject and I am personally quite comfortable with planning my own finances. I also hope that the articles that I write here over the coming weeks and months will help my family and friends (and with any luck a large group of strangers) to get their financial houses running in tip-top shape. If there is a particular topic about which you would like to learn more, let me know and I will explore the topic here.

Good luck.

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2 Responses to “Financial Planners”


  1. Maria Rogers Says:

    everyone should know about good financial planning becuse it can give you more success.“,


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