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Fees Can Be Crucial in Choosing Adviser

August 05, 1990

The problems with the financial planning industry have been well documented by the press. Bill Sing's "Picking a Financial Planner Who Isn't a Quack" (July 22) touched on some of the key problems.

Many of the tips made sense, especially noting that registration with the Securities and Exchange Commission does not imply endorsement. This should be handled like publicly traded securities, which also must be registered with the SEC. A prospectus states in bold print on the cover that the SEC does not endorse the particular security. But the prospectus and the full disclosure statement allow a consumer to discriminate based on the planner's education and experience.

However, the article barely touched on the paramount issue of compensation. Although Sing mentioned that there are three different types of compensation structures (fee only, commission only, blend), he neglected to mention that anyone who earns commissions and offers financial planning advice has an intrinsic conflict of interest. Advisers working on a "fee only" basis have nothing to sell but advice. The advice is premised solely on its merit for the client.

The National Assn. of Personal Financial Advisers, (312) 537-7722, is an organization for fee-only advisers and will provide interested parties with a list of advisers in their area.

Bill Sing is correct in his assessment that "the ultimate responsibility for scrutinizing advisers is yours, not the government's."

STEVEN A. WEINTRAUB

La Jolla

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