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Financial advice for the middle class

Financial advice for the middle class

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St. Louis Community College

St. Louis Community College-Meramec. 

Personal finance writers hear the question frequently: I need some help with managing money. Can you recommend somebody?

We probe a little, and usually find that the person asking isn’t wealthy enough to command the rapt attention of one of our local investment wizards.

So, where does the average family go for help? It depends on what you need.

If you’re mystified by money, head first for the library or the classroom. There are two reasons for this:

• You may find all you need there. Family finance and basic investing isn’t that complicated if you’re willing to do your homework.

• If you still want one-on-one advice, you’ll have a much more intelligent conversation with your adviser. You’ll also be able to spot really bad, self-serving advice when you hear it.

Basic financial planning courses are really cheap. St. Louis Community College offers four-week night courses for $55 or so. Titles include: Financial Workshop: Your Source for Financial Education; Preserving Capital and Making it Grow; and Retire with Confidence. To sign up call 314-984-7777 or go to www.stlcc.edu/ce.

The University of Missouri’s extension division is offering a $49, five-session course called the “Women’s Financial Education Series.” Men are welcome, too. It starts beginning Oct. 2 in Creve Coeur. To sign up call 636-970-3000 or go to www.extension.missouri.edu/wfes.

The courses tend to be taught by people in the investment business, from companies such as MetLife and Edward Jones. On one hand, these are knowledgeable people. On the other hand, their companies sell financial services. The colleges say their purpose is educational, and the teachers aren’t allowed to pitch their students for business.

The University of Missouri’s Suzanne Gellman is in charge of the Women’s Financial Education series. She and I agree that the best single book on family finance is Jane Bryant Quinn’s “Making the Most of Your Money Now.”

Don’t drop it on your foot. It’s 1,200 pages long but it has good advice on budgeting, savings, insurance, investing — everything.

Gellman also likes the less tomelike “Ultimate Financial Plan” by Jim Stovall and Tim Maurer. Twenty- and thirty-somethings should read “Get a Financial Life” by Beth Kobliner, she says.

Once you have some money to invest, try “The Only Guide You’ll ever Need for the Right Financial Plan” by Larry Swedroe, the director of research at Buckingham Asset Management in Clayton. He is a guru of the passive index investing approach, which emphasizes the value of asset allocation over stock-picking.

“He’s a really bright guy,” says Rob Weagley, who chairs the department of personal financial planning at the University of Missouri in Columbia, and recommends the book.

After all that, many of us will still want a human being to look over our shoulder.

Most financial advisers hanker for rich clients. Their goal is to get lots of their money under wing, then charge the client for managing it, either through commissions on products or through a percentage fee on the assets.

If you don’t have a lot of money, you can still buy some advice on an hourly basis from a “fee-only” financial planner. There’s some confusion about the “fee-only” term. But pure fee-only advisors won’t sell you investments — they just tell you what to buy.

The approach eliminates the conflicts of interest rampant in the investment business — for instance, the temptation to sell you a high-commission annuity when you’d do better by boosting your 401(k) contribution.

Not all fee-only planners will work by the hour. You can find one through the Garrett Planning Network, at garrettplanningnetwork.com, and through the National Association of Personal Financial Advisors, at www.napfa.org.

Look for the letters CFP after the advisor’s name. Certified Financial Planner means the person has experience and passed a vigorous series of courses and an exam.

Fee-only planners aren’t cheap. Think $150 or $180 an hour. A full plan — from budgeting to taxes, to insurance to investing — might run eight to 10 hours, says Lesley Killcullin of Fiduciary Advisors in Town and Country.

The approach also works for quick advice on a specific issue, like what to do with a sudden inheritance.

Michele Clark of Clark Hourly Financial Planning in Chesterfield, recently helped a client redo his 401(k) investments. It took about an hour.

Before you hire anyone, check them out their work and disciplinary record through www.finra.org. Click on “broker check.”

The Missouri and Illinois securities divisions also will check a broker for you over the phone, and tell you if a security is registered. In Illinois, call 1-800-628-7937; in Missouri, it’s 1-800-721-7996.

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