It’s Not Too Much to Ask Advisor to Put the Client’s Interests First

Question: Our financial advisor recently called and offered to switch our individual retirement account investment to what he calls a “more secure and less volatile” mutual fund. I am hesitant for several reasons. This advisor has never troubled himself to contact us other than when he has a new plan for our money, which has been twice in 10 years. When we have called him, all we’ve gotten is his assistant. Also, I noticed on his written proposal for us that he wants a 1.5% fee annually for managing our account, which would cost us about $800. Currently, we are paying only about $60 a year in custodial fees. Should we do this?

Answer: Let’s tote this up. Your “financial advisor” ignores you for years at a time, contacts you only when he has something to sell and apparently wants a thirteenfold increase in his fee for such “service.”

And you’re actually considering going along?

It would be nice if you had a real financial advisor--someone who takes the role seriously, who has a financial planning credential such as the Certified Financial Planner mark and who puts your interests first.

Unfortunately, that may be tough to find with an account as small as yours--a little more than $50,000, based on that fee you quoted. Many of the best financial planners have gravitated toward serving the wealthy.

But that doesn’t mean it’s not worth trying. You can get more information about how to find a financial planner at www.la times.com/money.

As a small investor, you probably can’t expect the same level of attention an advisor would lavish on someone whose account generates five- or six-figure fees and commissions.

But it’s not too much to ask for regular contact that doesn’t include a sales pitch.

Many people with small accounts choose to serve as their own financial advisors. With the help of some basic investing books, you should be able to construct a no-frills, diversified portfolio that will tide you over until your accounts are in the six-figure range, when you can command more attention from a professional.

You can start with one of the many good books for beginning investors, such as Eric Tyson’s “Personal Finance for Dummies” or Kathy Kristof’s “Investing 101.”

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Taxpayer Advocate

Could Be of Service

Q: I wanted to share yet another alternative for people who are having trouble with the IRS. I was getting computer-generated letters claiming that I owed federal taxes for a household employee I hired to care for my 101-year-old mother. I sent numerous letters with copies of the cashed check to show the IRS that I had paid the tax, and also called the toll-free number several times, but the IRS letters kept coming. I was about to consult a tax attorney when a friend told me about the Taxpayer Advocate Service, which is free. About three weeks after I contacted the advocate service, I received a nice letter of apology from the IRS, with a small refund to boot! So unless someone has a complicated tax issue requiring legal advice or the services of an accountant, I would highly recommend contacting the Taxpayer Advocate Service.

A: Thanks for sharing your experience. The Taxpayer Advocate Service is an independent program within the IRS designed to help taxpayers handle problems that haven’t been solved through normal IRS channels. There’s a national taxpayer advocate as well as at least one advocate in each state and IRS district. You can contact the service at (877) 777-4778 or visit www.irs.gov to find a list of local advocates.

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Large Estate May

Require a Lawyer

Q: You recently answered a question from a man whose uncle was doing his own estate planning. The nephew called the uncle pig-headed, and you agreed. But if the uncle is such a fool, how did he acquire an estate of $3 million to $5 million? Information is readily available for setting up trusts, writing wills, etc. Maybe the uncle can take care of his own business and the nephew should butt out.

A: Business smarts is one thing. Keeping up with complex and ever-changing estate tax laws is another. Even Nolo Press, which specializes in do-it-yourself legal books, doesn’t recommend do-it-yourself estate planning if the estate is large enough to incur estate taxes--and a $3-million estate still qualifies.

You might think you’re saving money and avoiding lawyers’ fees by drafting your own will and trusts. But the attorneys may have the last laugh when they’re called in after your death to straighten out the mess you’ve created.

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Liz Pulliam Weston is a personal finance writer for The Times and a graduate of the personal financial planning certificate program at UC Irvine. Questions can be sent to her at moneytalk@latimes.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. She regrets that she cannot respond personally to queries. For past Money Talk questions and answers, visit The Times’ Web site at www.la times.com/moneytalk