The Wealthy Retiree Part 11 – The Benefits of a Fee-Only Financial Advisor

Quaero paused at the door. He took a moment to close his eyes and reflect. Then, as if awoken from a trance, he knocked.

This was the last Tuesday lesson Quaero would receive on retirement success from the wealthy retiree, his good friend Will.

As he entered the door, Will was sitting quietly, apparently waiting for him. “Are you ready for your final lesson?” He asked softly.

“I’m ready.”

“Good, follow me. It’s time to go car shopping.”

Quaero knew better than to say a word. In fact, he wasn’t even surprised. This type of odd behavior from Will was now expected.

“You drive.” Will said as he put on his sunglasses and took off like a shot down the hall of the assisted living complex.

The unlikely pair pulled into the lot of a used car dealer and got out. Will began looking at the selection of the various cars and trucks. He kicked the tires, giving Quaero a quick wink, almost triggering a salesman to come running.

“Name’s Ned,” said the salesman wearing khakis and a white shirt and checkered tie as he extended his hand to shake Will’s.

“I’m Will.”

“Can I help you find something, Will?”

“Well Ned, I’m looking for something reliable, with not too many miles, I’d also like something a little sporty, no kids in my back seat.” The 84-year old joked as he elbowed Ned.

“No problem there, Will. We’ve got a great selection to fit your description. What are you looking to pay?”

“No more than $12,000.”

“Great, let’s me show you what we have.”

Will and Ned walked from car to car as Quaero followed behind listening. Quaero noticed that despite the fact that Will had told the salesman $12,000 was his limit, Ned showed him cars that were a few hundred or even thousand dollars above that limit.

Will listened patiently as Ned poked and prodded trying to get Will to fall in love with a car that was more than Will’s budget. When Will did find a car that sparked his interest, Ned became relentless in trying to close the deal.

Will was calm as he coldly denied the salesman’s continuous advances. Finally, they left, leaving poor Ned with nothing.

As they drove back to Will’s home, Quaero began. “Alright, so what was that all about?”

“Did you learn anything from what we just experienced?” Will inquired.

“Only that I never want to negotiate with you.” Quaero joked.

“Quaero, I walked onto that lot armed with no independent information and not really sure of what I wanted. This left me at the mercy of a commissioned salesman to provide me with the needed information to make the right decision. Was that smart?”

“No.”

“You’re right, it wasn’t smart at all. Had I actually been shopping for a car, Ned could have worked his charms and sold me something I didn’t need at a very unfair price. His incentive is to maximize his commission, mine is to get the best product at the best price and I came unarmed.”

“Makes sense.”

“The same is true when hiring someone to help you with your money. You can hire a commissioned salesperson and hope they have the integrity to treat you right, despite where their incentives lie, or you can work with an independent who is paid only by you, leaving her incentives tied to yours.”

“Oh, that makes a lot of sense.”

“Find a fee-only financial advisor, not fee-based or commission based, to give yourself the best shot that your advisor’s incentives are aligned with yours. It also helps to look for a CFP®.”

“CFP®?”

“It stands for Certified Financial Planner™ and it will mean that your planner has at least a base knowledge of financial planning and some experience to boot. CFP® is considered the gold standard in the financial planning world.”

“That is great advice. Thanks! I will definitely talk to Maria about this to make sure that we do our research when looking for a good advisor.”

The two pulled into the parking lot of the complex and walked back to Will’s room slowly. They both said very little realizing that the lessons were now over.

Will opened the door to his apartment and they entered, closing the door behind them.

Just then, as if by magic, there was a knock at the door. Will answered and could tell it was a delivery man of some sort. Will exchanged money and a package with the colorfully dressed teenager and closed the door.

“What’s that?” Quaero asked.

“Your graduation present.” Will relied.

They both sat at the table as Will opened the bag from D’Angelo’s deli and pulled two steaming meatball parmesan sandwiches out. He passed one to Quaero and said, “It’s been a fun journey. The rest is up to you. Take what you’ve learned and make your future remarkable!”

“Will, I can’t thank you enough. You’ve changed my life. I will always be grateful.”

Will smiled as the two sat quietly and ate the most delicious meatball sandwich Quaero had ever tasted.