Do you need a financial adviser?

Consumers reported a significant difference between the results produced by advisers (8.5 percent) and the results of consumers who did not use paid advice (2.9 percent), according to a nationwide study of moderate- to high-income consumers conducted by the International Association of Financial Planning and Dalbar Inc., a Boston-based financial services research firm.

When respondents were asked whether paying for advice was "worth it," an overwhelming majority (85 percent) agreed that it was.

A Bankrate.com survey, however, reveals that not all experts get straight A's. In response to a question on whether readers were generally satisfied with the recommendations they had received, a slight majority (41 percent) answered yes, followed by those who were somewhat satisfied (36 percent) and almost a fourth (23 percent) who were not satisfied at all.

So, which survey is closer to the truth? The answer may lie in knowing when you need a financial guru.

Knowing when you need help

As you travel the road toward financial prosperity, you'll reach a point where doubts creep up about whether you need financial help. What exactly can a financial planner do for you?

A financial planner is a person who helps you organize your specific financial objectives and customizes a plan to fit your individual concerns. On the other hand, investment advisers, also known as money managers, manage assets and suggest portfolio changes.

Whether you should use a planner or adviser depends on what your financial goals are. Are you looking to save toward retirement or child's college education?

Defining your goals will help you develop a financial strategy. You will also need to review all information concerning your income, mortgage, tax returns, banking, employee benefits and outstanding debts to make a well thought-out decision.

The tale of Ed and Betty

Here's an example of how a financial planner helps a client develop a course of action. "Ed" and "Betty" are both 40 years old. They have no kids but a gross family income of $85,000. They went to see Jim Maher, a financial planner with the National Planning Corporation in Boca Raton, Fla. The couple placed helping their parents, retirement and travel at the top of their priority list. They were already contributing to a 401(k), nondeductible IRAs and a savings account.

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"The problem they posed to me was that they did not know how all these financial tools were working together," Maher says. "Through our discussion, we repositioned the IRAs into a managed mutual fund account. We reallocated money in Betty's 401(k) and changed their life insurance program. Through a combination of these modifications, her means for retirement are well under way.

"Also, by using permanent life insurance in their plan, they will protect themselves and have money available for their parents if they should predecease them. In addition, we paid off some consumer debt and improved their monthly cash flow."

Our survey found that the main reason most of our readers turn to planners is for comprehensive financial planning (30 percent), with retirement planning (27 percent) and investment and asset management (20 percent) close behind. Estate planning and asset protection, tax planning, funding education and miscellaneous services rounded out the list.

-- Posted: March 21, 2000