Womoney - Sharon Rich

Sharon Rich

October 1994, Guide to Financial Advisors

Worth magazine

We left no spreadsheet unturned when we set out to produce a list of America's best financial advisors. We even checked their personal credit records.

By Robert Clark

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Ask yourself this: are you totally satisfied with the state of your finances? If you answered yes, congratulations, and see you later. You don't need to read this story. But you probably answered no, or maybe you just sort of sighed. If you're a typical working American, preoccupied with a family, a career, or both, the complexity of personal finance today threatens to overwhelm you. It's almost impossible to master every single money issue that can crop up. Taxes. Insurance. Mortgages. Credit cards. Mutual funds. Stocks. Company benefits. Retirement plans. Estates. Wills. Trusts. The list of concerns is long, and nothing about it is becoming simpler. In 1993, the American Association of Retired Persons commissioned a detailed study of financial planning in the U.S. The report, written by Barbara Roper of the Consumer Federation of America, concluded that consumers "are now faced with a highly complex financial landscape, creating a greater need for expert assistance."

What sort of expert assistance? Certainly there are plenty of people out there who would be delighted to help: bankers, stockbrokers, accountants, etc. But not all of them have the experience, training, and scruples to deserve your trade. This is a field full of credentials and initials, and literally anyone can solicit business as a financial advisor (see "SIDEBAR: What's in a Name? What Isn't" further down in this file). If you distrust more would-be advisors than you trust, you'll rarely be disappointed.

Yet people do need help, and that's why we conducted a search for the best financial advisors in the country. We compiled a list of 60 professionals who overcame our skepticism and met our criteria (see "LIST: America's 60 Best Financial Advisors" further down in this file). The table is organized by state to help readers find an advisor near their homes. We've also provided phone numbers and a rundown of the advisors' credentials. You'll note that the list is heavy on generalists. Our advice is to use salesmen in specific areas only when you need to conduct business that requires their help. Use a stockbroker, in other words, to buy stocks and bonds, not to plan your investment portfolio. Use an insurance agent to buy insurance, not to arrange your estate to minimize taxes after your death. A good generalist will have areas of particular expertise. But he or she can look at all parts of your financial situation to determine what needs attention. Should you be paying off your mortgage faster? Do you need to diversify your holdings? Is your insurance coverage adequate? Will you have enough savings to fund your retirement?

Most of the advisors on our list typically call themselves financial planners, and many have acquired the title certified financial planner. Consider this at least encouraging, for it does reflect a certain degree of training as well as some commitment to a code of ethics.
But don't think of any credential as a guarantee. Not all financial planners, including some CFPs, are the independent thinkers that they pretend to be. Most receive commissions for the insurance, mutual funds, and other products they sell. Remember the tax shelters, limited partnerships, and high-yielding insurance products that went bust during the 1980s? All were sold by financial planners who got paid for doing so. We recommend that you seek out fee-only planners or at the least use great care when choosing a planner who accepts commissions as a salesperson.
We believe that the planners on our list are both enlightened and ethical and that they worry about what's right for their customers. We believe that there are plenty more where these came from, too. Yet it never hurts to remember that for almost all financial advisors, there are powerful financial incentives pushing in exactly the wrong direction.

Buyers must beware.

Who Are These People?

We produced our list of 60 top advisors by first soliciting 300 nominations from 30 highly regarded financial specialists across the country. We then quizzed our nominees about their fees, potential conflicts of interest, education, professional experience, and specialties. We asked for their form ADV, which the Securities and Exchange Commission keeps on file for advisors who make securities recommendations. And we asked to see an actual financial plan prepared for a real client (with the client's name removed, of course). After reviewing all this material carefully, we insisted on a crucial test: a review of each candidate's personal credit report as compiled by TRW. The best financial advisors, we felt, should practice what they preach, and to the best of our knowledge, all 60 advisors who made our list do just that. (Unlike the one prominent advisor was carrying more than $80,000 in credit card debt, with balances spread across 32 different cards. That kept this person off our list.)

We also looked carefully at our advisors' educational backgrounds and industry credentials. Not all the advisors we selected turned out to be certified financial planners. But most of them did. To qualify as a CFP, a financial advisor must pass an exam administered by the CFP Board of Standards, a nonprofit organization based in Denver and composed of representatives of all areas of the financial-services industry, including the College for Financial Planning. Finally, we looked at each advisor's policy toward fees, with a particular emphasis on how they handle potential conflicts of interest. One of the things we wanted to learn more about was how advisors manage their personal financial interests when they conflict with those of their clients. We found a variety of approaches. Most of the advisors on our list work for fees only, rather than charge commissions. That's the cleanest and simplest approach. Many fee-only advisors readily concede, however, that cutting out commissions doesn't fully eliminate the potential for conflict. For instance, an advisor who charges clients a 1 percent annual management fee makes less when he or she tells a client to use money to buy insurance or build an addition on the family home. The best advisors who accept commissions assert that full disclosure is the key. And it is. Advisors who work for commission had a tough time making our list, but five succeeded. The most impressive approach to conflicts from an advisor charging commissions was that of Madeline I. Noveck, a financial planner in New York City. Noveck told us that she sets a fixed fee for her advice. Then, if she recommends products that pay her a commission, she reduces her fee accordingly.

The Heart of the Matter

The crucial part of the evaluations, of course, were the financial plans the advisors submitted. Some of these were surprisingly shoddy; some were quite impressive. All the good plans had a summary page up front that listed the client's particular circumstances and goals, followed by specific recommendations. No boilerplate, no caveats, no legalese. Just an outline of present circumstances, future plans, and strategies. One plan we especially liked contained a timetable that listed the specific duties of both the planner and the client. We had less regard for planners who appear to rely excessively on canned, computer-generated financial plans that were short on specific advice tailored to the client. Reams of spreadsheet analysis of retirement scenarios and college-funding projections left us unimpressed. All good financial advisors do them, but they're pretty incomprehensible to clients. The best plans, when they included such projections at all, used them as supplements to the more crucial and more easily understood main presentations.
In many cases we were pleased to see small signs that the advisor was really paying attention and taking the task as seriously as a client deserves. Several planners, for example, analyzed homeowner and auto insurance policies and recommended money-saving switches.
Overall there was more good planning than bad, but there was certainly some bad. We dumped several candidates because we thought they made unrealistic assumptions about future investment returns. One plan, for example, drew up a portfolio that was essentially conservative, yet assumed annual returns of 12 percent. The more impressive plans based projections on after-tax, inflation-adjusted rates of return. These sorts of calculations appeared most grounded in reality.
We didn't know whether to chuckle or weep over one plan. It included a meticulously projected retirement portfolio that ran out of money before the client even reached age 80. Another plan left the insurance proceeds in an estate, where it would be taxed -- a glaring error in most situations. We even saw a plan that showed a current negative cash flow but failed to even note the problem.

Cost and Value

A good advisor begins work with you as a new client by taking a complete financial inventory. The advisor will cover the basics: income and expenses, assets, and liabilities. Then he or she will look at things like insurance policies, pension plans, and tax returns. If you own your own business, you'll need to talk about that. The advisor will also inspect mortgages, auto leases, credit card debt, lines of credit, wills, and trusts. Your investment portfolio should also receive careful attention. Next the advisor will ask you to envision your future. Do you want to buy a bigger house? Send your kids to college? When do you want to retire, and on how much? Together, you and your advisor will draw up a set of goals. Finally, your advisor will give you a list of recommendations on how to reach those targets.
How much is all this service going to cost you? It depends, of course, on the complexity of your situation. It also depends on whether the advisor charges by the hour or establishes a set fee for a particular task and whether he or she charges commissions. Commissions, as we've said, open the door for possible conflicts of interest, so although there are more commission-oriented advisors than fee-only advisors, we advise you to stay with the latter group.
Fees vary by location and according to the experience and skills of the advisor, but hourly charges generally run between $100 and $250. Fixed rates for financial plans can range between $500 and $10,000. Fees to manage assets should fall between 0.5 percent and 1 percent annually.

On Your Own

Eventually, you may need to conduct your own search for a financial advisor. Once again, some skepticism is called for. Keep in mind that the industry is unregulated. Anyone can call himself a financial planner, hang out a shingle, and charge people for advice without having credentials, training, or oversight of any kind. Only if such a person doles out securities advice must he file form ADV with the Securities and Exchange Commission. Even then the requirements for registration are minimal: A registered investment advisor has to pay a fee of $50 and meet certain disclosure and record-keeping requirements, and will have to sit through a visit from an SEC examiner every ten years or so.
If you can't find an advisor on our list that's right for you, the financial-planning trade associations will offer recommendations. Contact the International Association for Financial Planning at 800-945-4237, the Institute of Certified Financial Planners at 800-322-4237, and the National Association of Personal Financial Advisors at 800-366-2732. You're going to have to evaluate these people yourself, however. These services can't do much more than provide a local listing of members. (For a list of questions to ask a prospective advisor, see "SIDEBAR: Do-It-Yourself Skepticism" further down in this file.)

Experience should be one of your primary considerations. Most of the advisors on our list have been around at least ten years; don't accept much less. An advisor's lengthy tenure in a community can be another good indication of stability and competence. People with community ties are less likely to treat their neighbors unscrupulously than are fly-by-night operators.
Look for good references, but don't get them from the advisor's clients. A good reputation among local nonplanning professionals -- lawyers, CPAs, and others -- is more difficult to earn and more valuable.

In short, your evaluation of a prospective advisor should be as rigorous as our tests were. And you might add one more important question: Is this someone you can learn from?

For when all is said and done, it isn't smart for anyone to transfer ultimate responsibility for his or her financial affairs to someone else. There's a crucial difference between getting a professional's help and completely handing over the reins.

Stay involved with your own finances
-- at least enough to have a basic understanding. Know the rudiments of investing, taxes, insurance, and banking. The advisors we've endorsed understand the importance of this and are committed to educating their clients as they advise them. That's what makes the relationship work for both parties -- but especially for the client, whose financial future, after all, is on the line.

--------------- Robert Clark is a senior editor of Worth. ------------------------------------------------------------

LIST:America's 60 Best Financial Advisors

Here is a list of 60 professional financial advisors who overcame our skepticism and met our criteria for excellence.

For each financial advisor listed below, we've included a telephone number, information on whether the advisor charges by fee or commission; the advisor's credentials; and the advisor's area of expertise. For details on what the different credentials mean,

see "SIDEBAR: What's in a Name? What Isn't?" further down in this file.

ADVISOR CITY PHONE(Fee or commission; Credentials; Area of Expertise)



Charles Haines Birmingham 205-871-3334 (Fee; CFP, MBA; Professionals, business owners)


Thomas Connelly Phoenix 602-955-5007 (Fee; CFP, CFA; Portfolio management, retirement, estate)


Jack Blankinship Del Mar 619-755-5166 (Fee; CFP; Portfolio management, retirment)
Norman M. Boone San Francisco 415-788-1952(Both; CFP, MBA; Family businesses)
Stanley H. Breitbard West Los Angeles 310-201-1913(Fee; CPA, PFS, MBA; Executives)
Tim Kochis San Francisco 415-394-6668(Fee; CFP, MBA, JD; High-income people, executives)
Irwin Rothenberg Santa Rosa 707-542-3343(Fee; CPA PFS; Medical professionals, investments)
Robert Wacker San Luis Obispo 805-541-1308(Fee; CFP, EA; Professionals, retirement)
Margaret Wertheimer Mount Shasta 916-926-3165(Fee; CFP; Estate planning and business owners)
Violet P. Woodhouse Anaheim 714-283-3550(Fee; CFP, JD; Marriage and divorce)


Myra Salzer Boulder 303-444-1919 (Fee; CFP; Inheritance)
James A. Shambo Colorado Springs 719-574-0100(Fee; CPA, PFS; Business owners, professionals)
Eileen Sharkey Denver 303-329-9100(Fee; CFP; Retirement, estate, women)
Judy Shine Denver 303-290-0702(Fee; CFP; Retirement portfolios)
Robert E. Willard Colorado Springs 719-473-2200(Fee; CFP, MBA; Physicians and business owners)


Judy Lau Wilmington 302-792-5955 (Fee; CFP; Inheritance, executives, professionals)
Vincent Schiavi Wilmington 302-656-4472(Fee; CFP, CPA; Retirement)


Michael Davis Orlando 407-422-0252 (Fee; CFP, JD, LLM, CPA; Professionals, retirement, estate)
Deena Katz Coral Gables 305-448-8882(Fee; CFP; Planning for women)
Linda Lubitz Miami 305-670-0545(Both; CFP; Divorce, widows)


Elaine E. Bedel Indianapolis 317-843-1358 (Fee; CFP, MBA; Business owners, executives)
Gary Pittsford Indianapolis 317-849-9559(Fee; CFP; Portfolio management, business owners)


Gary N. Bowyer Chicago 312-631-8070 (Fee; CFP, MBA; Retirement, business owners)
Michael Kabarec Palatine 708-934-7777(Fee; CFP, CPA, EA; Executives)


Kathleen A. Stepp Overland Park 913-649-3311 (Fee; CFP, CPA; Thirty-somethings)


Peg Downey Silver Spring 301-587-0663 (Fee; CFP; Women, middle-income people)
David Drucker Bethesda 301-469-3999(Fee; CFP, MBA; Inheritance, retirement, widows)
J. Michael Martin Ellicott City 410-750-7000(Fee; CFP, JD; Retirement planning, portfolio management)
Mary Malgoire Bethesda 301-469-3999(Fee; CFP, MBA; Inheritance, retirement, widows)
Brian Meritt Baltimore 410-296-4600(Fee; CPA, PFS; Business owners, taxes, executives)
Edward O'Hara Silver Spring 301-680-0840(Fee; CFP, EA; Taxes, middle-income people)


Virginia Applegarth Winchester 617-721-5445 (Fee; CFP, ChFC; Investment planning)
Cary Geller Cambridge 617-547-5900(Fee; CFP, CPA, MBA; Tax, estate planning)
Jane V. King Wellesley 617-431-1119(Fee; CFP; Investment and estate planning)
Sharon Rich Belmont 617-489-3601(Fee; Ed.D.; Women, inheritance)


Marilyn R. Capelli Flint 810-768-4739 (Fee/salary; CFP; Professionals, business owners)
Bert Whitehead Franklin 810-737-7090(Fee; JD, MBA; Young professionals)


Katharine McGee St. Louis 314-863-1867 (Fee; CFP; General financial planning)


Patricia S. Feeney Medford 609-654-1212 (Fee; CFP; Portfolio management, high-net worth)
Diahann W. Lassus New Providence 908-464-0102(Fee; CFP, MBA, CPA; Business owners, divorcees and widows)


Roy C. Ballentine Wolfeboro 603-569-1717 (Fee; MBA, ChFC; Business owners)


Joel Isaacson New York City 212-302-6300 (Fee; CPA, PFS; Tax, executives, business owners)
Martin Jaffe New York City 212-504-4011(Fee; CFP, MBA, EA; Tax, portfolio management, wealth transfer)
Stuart Kessler New York City 212-523-1304(Fee; CPA, PFS, MBA, JD, LLM; Executives, business owners)
Madeline I. Noveck New York City 212-876-1367(Fee-offset; CFP; Investments, retirement planning)
Ronald W. Roge Centereach 516-471-2786(Fee; CFP, MBA; Investments, business pension plans)


Giles Almond Charlotte 704-366-7100 (Fee; CFP, CPA, PFS; Tax, business owners)
Larry W. Carroll Charlotte 704-553-8006(Both; CFP, MBA; Investments)


Michael J. Chasnoff Cincinnati 513-792-6648 (Fee; CFP; Retirement, insurance)


Kyra Hollowell Morris Charleston 803-722-9803 (Fee; CFP; Business owners, asset management, estate planning)
James Wilson Columbia 803-799-9203(Fee; CFP; Physicians, business owners)


Lori A. Dodson Nashville 615-242-7351 (Fee; CFP, CPA, PFS; Retirement planning, estates)
William B. Howard Jr. Memphis 901-761-5068(Fee; CFP, ChFC; High-income, high-net worth)


Janet Briaud Bryan 409-260-9771 (Fee; CFP; College professors)
David Diesslin Fort Worth 817-332-6122(Fee; CFP, MBA; Business owners)
Steven P. Kanaly Houston 713-626-9483(Fee; CFP; Investments, estates)


Lynn Hopewell Falls Church 703-821-6661 (Fee; MBA, CFP; Retirement planning)
Andrew Hudick Roanoke 703-342-7102(Fee; CFP, MS; Business owners)

Greg D. Sullivan McLean 703-734-9300(Both; CFP, CPA, PFS; Professionals, retirement, 95% fees)


Mary P. Merrill Madison 608-255-5469 (Fee; CFP, MBA; Professionals, executives, business owners)

SIDEBAR:What's in a Name? What Isn't?

Tips on understanding terms and credentials.

How do you qualify as a financial advisor? You start selling advice, simple as that. That's why it's important to understand what an advisor's experience and credentials qualify him or her for. Here are the people most likely to be hanging out the ADVISOR shingle and what they are best at.

CERTIFIED PUBLIC ACCOUNTANTS (CPAs) are educated in either taxes or auditing. Accountants who do financial planning usually either hold the personal financial specialist (PFS) designation or are certified financial planners (CFPs). Accountants generally charge only fees. Sometimes they won't recommend specific investments or insurance policies.

STOCKBROKERS are trainedin securities laws and selling techniques. They are not required to register as investment advisors because they are salespeople working for brokerage firms. They earn commissions from selling products. Brokers are most valuable, of course, to investors who need help choosing stocks, bonds, and mutual funds.

INSURANCE AGENTS analyze how much insurance clients need and what type, and are trained in the principles of underwriting. Sometimes they hold licenses to sell securities as well. A chartered financial consultant designation (ChFC) is the insurance industry's financial-planning degree. These days, however, many agents who have become serious financial planners prefer to get the CFP.

ASSET MANAGERS or PORTFOLIO MANAGERS direct money into stocks and bonds or more esoteric investments. They usually charge a percentage of the assets they manage, typically between 0.5 percent and 2 percent. They are usually not concerned with other aspects of their clients' financial lives, such as insurance or taxes.

FINANCIAL PLANNERS are the all-arounders of the advising community, and the best typically are CFPs. CFPs are trained in insurance, taxes, retirement, estates, and investment planning. Most planners charge fees for financial planning and commissions for the products they recommend. But a growing number of the best advisors charge only fees for planning and sometimes a percentage of the assets they manage. For people who need comprehensive advice about their finances, fee-only financial planners are a good place to start.

-- by Robert Clark, October 1994, Worth Magazine


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