Money for the Rest of Us

Last time I wasn’t sure how I felt about my free sample of Consumer Reports Money Adviser. At the end of this review I’ll let you know my final thoughts.

I really liked the advice they gave about how to hire a financial planner:

“Questions to ask:

Who are your typical clients?
What services do you provide and what should I expect to pay?
Could anyone besides me benefit from your recommendations?
Will you be the only person working with me? You don’t want to be handed off to someone less experienced…”
How often will you communicate with me, and how many meetings does your fee include?”

I specifically liked CR’s recommendation that you contact a long standing client of the financial planner and ask them some questions:

“How long does it take to get a response to a question?
Have you been through a bear market with this planner? If so how did this planner respond?
What does this adviser do best?
Has anything in your relationship disappointed you?

While the piece about the financial planner was helpful, I was really perturbed by their advice about wills/power of attorneys/living trusts.

They say that that you need a will and a durable power of attorney, but you DON’T need a living trust:

“Why? A living trust allows you to place assets in a trust and control them during your life. For most people, revocable living trusts are nothing more than a rip-off. Unfortunately, some salespeople and lawyers promise that these legal vehicles will solve pratically every estate and tax problem you ever thought about. They won’t.”

First of all, this piece of advice really aggrevates me because they say that they are explaining why you shouldn’t get one, but they don’t actually explain it. They say it’s a rip off because it doesn’t solve every estate and tax problem; but this is crap. Of course, it doesn’t solve EVERY problem. Nothing does. So don’t say you are telling me why I shouldn’t get one when you don’t end up giving me any beneficial information.

Second, I am no expert in these matters, but I disagree with this advice. Why? Suze Orman says to get a revocable living trust. Normally I wouldn’t just go with whatever Suze Orman says, but she provides a very convincing argument in her book The 9 Steps to Financial Freedom in the chapter “being responsible to those you love.” Personally, I don’t yet have a will/trust/etc. set up. I’m young, un-hitched, no-kids, and not really enough assets for anyone to fight over. Though, I imagine in the next 2 years I’ll have to set something up. And when I do I’m fairly certain it will be a living trust.

Here’s another blurb that really bothered me. (This was a “tip” that was set off from the page in a colored box):

“Want a 269% return on your investment? If you can afford to invest for 5 to 10 years consider emerging markets like Brazil and India. During a 5 year period these markets returned 269 percent.”

Wow, that’s quite a return. But this tip needs about 18 disclaimers. Yes, 5 to 10 years minimum as an investment. I’d say 10-20 years. But you also need to be able to absorb this risk. Any market that can go up that quickly can come down just as fast. If you are really interested in emerging markets look for an index fund like Vanguard’s Emerging Market’s Index Fund. But don’t go throwing all your money into just one pot- like Brazil or India, who knows what will happen.

Overall, it’s hard to decide based on a free sample whether or not to buy this product. I am getting a free issue (not a sample) and book for a trial period so I will let you know the verdict then. It’s just unfortunate that Consumer Reports is putting such dramatic advice into their “free sample”.