By Tim Maurer, TheStreet Guest Contributor

HUNT VALLEY, Md. (TheStreet) -- Do you have one of those custom decals, usually on a minivan or SUV, depicting each member of a household? Most appear to have a 40-something couple with 2.5 kids, and for an extra couple bucks, you can even include the family pets.

There's no option to show the financial adviser you no doubt desperately need.

You have spent the past 15 to 20 years building your career. You're pleasantly surprised when you review the W-2s revealing your gross income -- "We made good money last year!" -- but that smile fades as you remember what you have to show for it: a couple of old 401(k)s you haven't had time to revisit since Cisco was trading in the triple digits, a larger-than-average mortgage balance on a house clinging to a sliver of remaining equity and a pile of unanswered questions about savings, spending and insurance.

Well, at least with these variables to manage, you should have financial planners clamoring to get your business, right? Kind of. Most financial advisers work for companies with compensation-based disincentives to work with you, mainly:

  • Commission only: The "adviser" -- usually a stock broker or insurance agent -- is compensated only by commissions on the purchase or sale of investment or insurance products.
  • Fee based: The financial planner derives a material amount of his or her compensation from fees for service but is also allowed to sell products for a commission.
  • Fee only: The financial planner accepts no commissions or referral fees and works only for a fee.

If it sounds like I'm shedding an especially unfavorable light on the first two and a favorable bias on the last, I am. But my bias is not uninformed. I spent nine years doing commission-only or fee-based work -- for brokerage firms, insurance companies or banks -- in which the financial planning process was missing or subjugated by the rush to sell. Financial planning was a means, not an end.

A commission-only purveyor is like a crocodile waiting for the annual zebra crossing -- if you don't buy, he or she doesn't get paid. In fee-based planning, the planner may be working for a fee one minute and as a commissioned salesperson the next. I'm not making a moral judgment here, but anyone labeled an adviser should never be able to sell also. Doctors also shouldn't work on commission.

Even the fee-only planner isn't bias free. Fee-only planners derive compensation from one or more of four ways: flat fees, hourly fees, assets-under-management fees and retainer fees. Flat fees create an incentive to rush work and hourly fees to stretch it. A planner basing his or her fee on the assets managed and invested for your household has a bias to pile up as much in manageable accounts as possible -- often to the detriment of emergency savings or debt elimination plans. And retainer fees, interestingly, as many are based on a client's total net worth (not solely the "investable" assets), may actually create an incentive for the client to withhold information, thereby lowering the fee.

Also, the planners you'd prefer to work probably won't want to work with you, and many of the planners who'll roll out the welcome mat are ones to avoid. Most financial planning and advising is conducted by firms that manage investment assets for a fee and have minimum asset levels of $500,000 or $1 million for comprehensive planning. That's a difficult threshold to meet for 40-something households in their peak expense years.

The "planners" who'll be most attracted to you are those who make money off commissions -- especially for the sale of life insurance and disability income insurance. Not to suggest those aren't very important pieces of your financial plan, but if you're having a financial planner affiliated with a major insurance company conducting a financial analysis for you, don't be surprised when they recommend you buy their company's insurance products. (That's how they can make decent money off someone who has good income but not a ton of assets saved.)

What, then, is the answer for the 40-something household? I recommend you begin with a comprehensive financial plan from a fee-only financial planner who charges flat rates or is willing to work on an hourly basis. (Personally, I don't like to feel like I'm on the clock, but some may prefer otherwise.) When you get to the actual management of your investments, I still prefer a fee-only expert who either provides a la carte advice that you implement, or better yet, a reasonably priced investment manager who will steward your assets for a set annual fee (after all, you're short on time). You should be able to find competent investment management for 1% per year or less.

You and your family are not a one-dimensional auto decal. Your financial plan should also have at least three dimensions: financial planning (rules and regulations); information planning (maintaining readily available records); and, most importantly, life planning (ensuring your personal finances are consistent with your values and goals). Bringing your financial plan to life will not only help your bottom line, but help make sense of the commodity used in virtually every aspect of our nonfinancial lives -- money.

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