Financial planners are in growing demand now because while more people are educated about investments than ten or 15 years ago, the number of investment options has exploded, making the financial landscape hard to navigate.
In 1982-1983, when he was largely dealing with educators, Dan Candura said he had to explain what a mutual fund was to his clients. Now there are more mutual funds than stocks on the New York Stock Exchange.
Besides monitoring market changes and making recommendations for investments, a financial planner can help a client re-balance a portfolio (or resist re-balancing it). A planner also helps people set goals, such as saving enough to buy a house or retire within in a certain number of years.
“The key issue we do encounter is that teachers often say they have enough with their pensions and Social Security, but often they do need additional income.”
Candura also subscribes to what he calls the “blue suit approach” -- meaning there are different yet just as effective ways of investing. “A lot of people are seeking perfection -- but there are lots of things that go with a blue suit -- you don’t always have to wear a red tie,” Candura told Education World. “People get immobilized because they can’t make a choice -- when sometimes spreading things out works well.”
Financial planners usually are one of two types. Some are affiliated with a company and earn money when they sell that company’s investment products, such as mutual funds. Often they do not charge a fee for their services.
Other financial planners do not market products and charge a fee for financial advice and to mange portfolios.
Marilyn Capelli Dimitroff, who works on a fee-only basis, said there is good advice available no matter what the compensation arrangement is. “The person seeking advice needs to understand how the advisor is being compensated,” she told Education World. “There is no right way. This way [fee-only] of doing business works the way I like to operate -- I’m on the same side of the table as the client. The only incentive is for the client to be better off.”
“We’ve done research over the past two or three years to get ideas of what members need. And they are leveraged -- it’s affecting their credit rating, ability to save, and ability to build a financial fortress.”
Candura also runs a fee-only business, and said sometimes that is difficult for clients to understand. “The financial planning profession has been built up as a product distribution network -- very few just deliver financial planning services,” he said. “More people want that -- just services. But many people can’t afford just that advice.”
A former teaching colleague came to Candura about 15 years ago, seeking advice on how to manage her assets. She had accumulated everything in cash.
“I told her there would be a one-time fee of less than one-quarter of a percent of the assets she wanted me to manage,” he told Education World. “She said a friend had gone for financial planning and it was free. She couldn’t get by the fee.”
Capelli is trying to promote fee-only financial services by approaching companies and school districts to hire him as a resource for all their employees.
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