Steer Clear of "Investment Advisors" or "Financial Planners" who also sell you investments

The only thing a financial planner or investment advisor should do is advise you where to put your money. Avoid any of these guys who ALSO want to sell you investments themselves! Why? Because inevitably they are going to sell you investment that make THEM money - not you!!! And they will be motivated to "churn" your investments so that THEY can continue to make money. 

Investment advisors pocket upwards of 8% commissions when they convince their clients to invest in crappy investments like annuities, limited partnerships, collectables (like stamps) and other odd investments. This is a CONFLICT OF INTEREST! Instead of advising you to go to your brokerage firm to buy normal investments like stocks, bonds and mutual funds (that they make no commission off of) they want to fatten up THEIR own bank account - not yours!  Investment advisors often may never even disclose to you that they have a large vested interest in selling you a particular investment. Also beware of investment advisors that direct you to buy from specific people or companies. The investment advisor may be making a kick back. 

Once they have you invested in these odd investments (like annuities and limited partnerships) they may attempt to FURTHER rip you off by convincing you to sell these odd investments and they buy into yet another annuity and / or limited partnership, thus pocketing even more commissions. This is called "churning" and is illegal (but very difficult to prove as fraud in court). Mindful of this, the crafty "investment advisor" may wait for an opportune "excuse" to cover his butt. Perhaps the annuity under performs the market by 5% over a period of time, or the annuity is downgraded by a ratings company. Now the advisor knows he has a viable defense if he ever winds up on the receiving end of a lawsuit. Feeling safe he then springs into action and advises his client to sell the investment and then buy another crap investment (often an annuity or limited partnership) that will bring him another hefty commission. 

Sometimes these investment advisors also charge their clients 1% a year - that's 1% of their entire investment portfolio! Now stop for a minute and ask yourself how much would be a reasonable dollar amount to pay a professional investment advisor to evaluate your financial situation and give you an hour of advise? You really shouldn't pay someone more than what you would pay a lawyer for an hour of their time. Better yet if you invested in mutual funds you would effectively have expert "investment advisors" handling your share of those funds that you invested in! 

The only real way to protect yourself is to avoid these people from the get go. Do you really need an investment advisor to hold your hand while you invest?  Have you researched who this advisor is and what is their background? Do they have a college degree and in what? Are they reputable wall street people OR are they just people who you heard about via friends. What investment firm or firms have they worked for? Even if they've done this and done that, keep in mind that in one study a chimpanzee throwing darts at stock listings in a newspaper outperformed professional stock pickers. So how hard is it to pick a balanced diversification of mutual funds and perhaps a 5% investment in gold bullion?  There are all kinds of newsletters out there like the Safe Money Report that cost only $100 a year.  If your portfolio is worth $100,000 then that's like paying just .01%. So why even pay an investment advisor for a one hour visit?