Is Investing Really This Complicated?
Nicole Dieker

If you are selecting a provider of financial advice, a valuable question to always ask is: “How are you getting paid to provide this advice?”

The correct answer is: “Only from the fees I’m charging you.” The wrong answer is: “Somewhat by the investments I’m selling you and brokerages doing the transaction.”

When an adviser is getting paid BY your investments instead of FOR them, conflicts are nearly inevitable. After all, those payments are not made out of charity or generosity; they are made because the payor thinks they’ll effect the behavior of the payee, and it won’t be to your benefit.

There is, in fact, a group of financial planners that advertise themselves as “fee only”; if you are going to pay somebody for financial advice at all, that is the kind you want. The fees for this sort will (obviously) not be, on average, the cheapest. But, better the costs I know about rather than the (quite possibly higher) ones that are hidden from me.

And, of course, you may not need to pay anybody at all. There are plenty of online retirement calculators out there that can make a vague guess at how much you need to save, when, for retirement. If your savings are significantly less than that number, the only advice you need on investments is: “Find a diversified, low-cost, long-term investment, and put more money in it.” (A Vanguard Target Retirement Fund is a great choice for most people.)

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