Are you getting value for what you're paying?

There are some financial planners who seem to view their clients as meal tickets.

A male investor sits at his desk looking at his laptop screen with his hand to his chin pondering whether to buy Origin shares

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

I was chatting to a family member on the weekend.

He was telling me about a mate of his who went to see a financial planner.

The mate had his Super invested through an industry fund, AustralianSuper.

And the planner's advice?

"You should move it to a wealth platform. The fees will be higher, but at least we can keep an eye on it."

At this point, I should acknowledge that perhaps the story got twisted and miscommunicated by the time I heard it.

And thankfully I don't know who the advisor was, so it saves me getting into any legal trouble.

It also potentially protects the guilty.

Because, and I hope you're with me, paying more 'so I can keep an eye on it' was almost certainly terrible advice.

And it's unfortunately only too common.

I've written before – and I stand by this – there are some exceptionally good financial planners.

As I wrote yesterday, some people just need or want a financial coach. That's important, and though potentially costly, can be less costly (and end up with more wealth overall) than not doing it, for those people, because it might save them from some terrible mistakes.

Some people need advice on the right structure for their investments, and to make sure they have appropriate insurances and have considered estate planning. Some expert advice on these areas can be really useful.

But… and you knew this was coming, didn't you… there are some planners who seem to view their clients as meal tickets.

Now, it's possible that the planner in question was misquoted. It's possible that there are some good reasons that a planner would need to 'keep an eye on' the client's Super.

I just can't think of any.

So why would the advisor suggest a client pay more in fees?

I mean… I couldn't possibly guess…

But if I was going to, I'd suggest that 'keeping an eye on' the money is probably the worst possible reason.

It's not like AustralianSuper is some small, tinpot operation. It's not like you can't get regular reporting on the Super balance and alter the investment strategy, if deemed necessary.

Is it possible that the advisor was doing it for his own benefit? Because he stood to make more money, or to make his – the advisor's – life easier, at the client's expense?

I don't know the answer.

I do know that the most controllable part of wealth creation is fees, and that too many people pay too much because they don't know better or are actively misled.

Now, if a financial planner is important to you, and keeps you on the straight and narrow, it can still be money well-spent.

If not… then your planner will be enjoying a lovely holiday at your expense. A holiday that could have been yours.

It's at this point some planners are hitting the 'send angry email' button on their iPhones. Some because they didn't actually read what I wrote. Some because they're angry at having their behaviour highlighted.

And, I'm not resiling from the criticism. If you're taking advantage of someone based on information asymmetry – because you know more than them, and are profiting from shamelessly magnifying and exploiting that – then I'm more than happy to condemn you for it.

(If you're currently thinking: "Hang on, doesn't The Motley Fool charge for advice?", you're dead right. And as I've said, repeatedly, to our members, if we're not delivering value, they shouldn't renew their membership to our services, either. This is not about us… it's about them.)

But, rest assured, I get more supportive emails from planners than angry ones. Because, as I said, the good ones get it, and deliver more value to their clients than they cost.

Still, I hope it's a cautionary tale.

I hope you have a financial plan – either personally, or via a planner.

I hope it's a plan that is going to help you achieve your goals.

I hope you're paying what it's worth. And not a dollar more.

And I certainly hope you're not paying extra for someone just to 'keep an eye on' your investments!

Fool on!

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Motley Fool Take Stock

A man wearing thick rimmed black glasses and a business shirt with red suspenders sits at his desk sorting through the earnings report of Nickel Mines
Motley Fool Take Stock

One big lesson from earnings season

There is a lot to take in.

Read more »

Australian notes and coins surrounded by a calculator and the word super spelt out.
Motley Fool Take Stock

A simple fix for superannuation

It's time to return Super to its original purpose, to remove the complexity and to stop it being used as…

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
Motley Fool Take Stock

Buffett's latest thoughts on business, investing and Berkshire

Whenever Warren Buffett speaks, or writes, I pay attention.

Read more »

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
Motley Fool Take Stock

Ignore forecasts (and guidance)

Think like a business owner, not a speculator.

Read more »

Businessman at the beach building a wall around his sandcastle, signifying protecting his business.
Motley Fool Take Stock

Invest like a Roman general

Humility is something to be cultivated in all walks of life.

Read more »

wooden block letters spelling DCA
Motley Fool Take Stock

The beauty of dollar cost averaging

Because it’s Friday. And I’m going to cover some investing fundamentals. But you knew that.

Read more »

Cubes placed on a Notebook with the letters "ETF" which stands for "Exchange traded funds".
Motley Fool Take Stock

Not all ETFs are the same… and that's a problem

ETFs are great… right?

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Motley Fool Take Stock

Lessons from a $600,000 share price

Today I’m going to aim straight down the investing fairway.

Read more »