Sticker Shock: Is Professional Financial Advice Costing too Much?

It can be difficult for someone in the financial services industry to know how the investor feels, especially when first choosing which advisor to work with. I recently had an experience that put me in your shoes for a change.

A couple of mornings ago, my teeth began hurting for a short time after I brushed them. It had been awhile (too long) since they were cleaned so I decided to go to the dentist for a cleaning and check-up.

I only have one set of teeth and I know that they need to take care of me for the rest of my life. Unless I want to exist on soft food, it's vital that I take care of them. Likewise, someone retiring only has one nest egg and their lifestyle and ability to remain retired will depend on what happens to it. Make a mistake and you can lose a good portion of it.

How do you choose an advisor? How do you choose a dentist? I could look in the phone book and I can ask people that I know whether they are pleased with their dentist. Still, how do I know if their experience with a dentist is going to be the same as mine? It's not like you can interview a dentist, get a price list and an extensive list of references!

Worse, the reason I was looking for a new dentist was because I wasn't pleased with the dentists I'd used in the past. Surely this time I would find one that I would like! So I called a dentist that seemed to do a good job for another family member and I set an appointment.

A red flag went up during the first call. I asked for an appointment after the stock market was closed for the day and amazingly, they just happened to have had a cancellation and I could get in that very day! Having a sales background, I know that's a common tactic to use because you don't want to give the impression that you aren't busy.

Another red flag was raised as soon as I walked into the office. There was leather furniture, a cafe and a plasma screen television. The coffee table featured literature on various cosmetic improvements. The plasma TV, it turned out, was just playing a loop designed to sell those improvements. I never realized that having whiter teeth would have such a positive impact on my entire life!

The phone sales tactic I picked up on was confirmed when I heard the receptionist say the same thing to others that were calling in. In the financial services industry, these are seen as harmless statements. "It's no big deal, they'll never know," the advisor might explain to the assistant. Maybe I'm old fashioned, but I don't want to be treated that way and neither do my clients.

Soon, I was ushered into the chair where I thought I was going to have my teeth cleaned. After a few pleasantries, the dental assistant said that she needed to take some x-rays and that they recommended the 360 degree one. "It is $199 for both sets, is that OK?"

While examining my gums she mentioned that oral cancer was very hard to detect and affected many people. They had a test that would screen for it and it only cost $49 would I be interested? No.

My appointment was for a cleaning. But all I received was the x-rays and the initial consultation. It's possible I have a cavity under one of my existing fillings and the dentist recommended it be fixed, not with a traditional filling but with a new crown that would be much better.

I left feeling like I paid $200 for some x-rays and a sales pitch. The full cleaning, it turns out, will cost over $500! That partial crown would only be $850! For comparison I called another dentist. This one seemed to be more old school. His cost for a cleaning? $110.

Have you ever felt like I did after going to an investment advisor? Undoubtedly, some of you have and I am ashamed to say that it is becoming more common. There are advisors out there, though, that are more focused on your needs than their own. Trust your red flag indicator, don't move quickly, and do extensive research on any recommended products.