Elusive adviser's phone call isn't in small client's interests

Little guy can learn how to start going it alone

Dollars & Sense

January 06, 2002|By Liz Pulliam Weston | Liz Pulliam Weston,SPECIAL TO THE SUN

Our financial adviser recently called and offered to switch our individual retirement account investment to what he calls a "more secure and less volatile" mutual fund. I am hesitant for several reasons. This adviser has never troubled himself to contact us other than when he has a new plan for our money, which has been twice in 10 years. When we have called him, all we've gotten is his assistant. Also, I noticed on his written proposal for us that he wants a 1.5 percent fee annually for managing our account, which would cost us about $800. Currently, we are paying only about $60 a year in custodial fees. Should we do this?

Let's tote this up. Your "financial adviser" ignores you for years at a time, contacts you only when he has something to sell and apparently wants a 13-fold increase in his fee for such "service."

It would be nice if you had a financial adviser who takes the role seriously, who has a financial planning credential such as the Certified Financial Planner mark and who puts your interests first.

That might be tough to find with an account as small as yours - a little more than $50,000, based on that fee you quoted. Many of the best financial planners have gravitated toward serving the wealthy. But that doesn't mean it's not worth trying. You can get more information about how to find a financial planner at www.latimes.com/money.

As a small investor, you probably can't expect the same level of attention an adviser would lavish on someone whose account generates five- or six-figure fees and commissions.

But it's not too much to ask for regular contact that doesn't include a sales pitch.

Many people with small accounts choose to serve as their own financial advisers. With the help of some basic investing books, you should be able to construct a no-frills, diversified portfolio that will tide you over until your accounts are in the six-figure range, when you can command more attention from a professional.

You can start with a book such as Eric Tyson's Personal Finance for Dummies or Kathy Kristof's Investing 101.

I wanted to share yet another alternative for people who are having trouble with the IRS. I was getting computer-generated letters claiming that I owed federal taxes for a household employee I hired to care for my 101-year-old mother. I sent numerous letters with copies of the cashed check to show the IRS that I had paid the tax, and also called the toll-free number several times, but the IRS letters kept coming. Then a friend told me about the Taxpayer Advocate Service, which is free. About three weeks after I contacted the advocate service, I received a nice letter of apology from the IRS, with a small refund to boot!

Thanks for sharing your experience. The Taxpayer Advocate Service is an independent program within the IRS designed to help taxpayers handle problems that haven't been solved through normal IRS channels. There's a National Taxpayer Advocate as well as at least one advocate in each state and IRS district. You can contact the service at 1-877- 777-4778 or visit www.irs.gov to find a list of local advocates.

You recently answered a question from a man whose uncle was doing his own estate-planning. The nephew called the uncle pig-headed, and you agreed. But if the uncle is such a fool, how did he acquire an estate of $3 million to $5 million? Information is readily available for setting up trusts, writing wills, etc. Maybe the uncle can take care of his own business and the nephew should butt out.

Business smarts is one thing. Keeping up with the complex and ever-changing estate tax laws is another. Even Nolo Press, which specializes in do-it-yourself legal books, doesn't recommend do-it-yourself estate planning if the estate is large enough to incur estate taxes - and a $3 million estate still qualifies.

You might think you're saving money and avoiding lawyers' fees by drafting your own will and trusts. But the attorneys might have the last laugh when they're called in after your death to straighten out the mess you've created.

Liz Pulliam Weston is a columnist for the Los Angeles Times, a Tribune Publishing newspaper.

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