Expert: Gina Boykin - 5/23/2008

Question
Hello, my late uncle left me 7 million dollars which was a solid transfer from his bank to my bank. At the present time I'm a $125,000 in debt due to my recent diagnose of cancer and we went from 2 incomes to one income. Before I became sick my take home pay was about $6 -7 thousand a month and my husband take home a month is $4000. Debt begin to pile as we lived off credit cards and spent money on treatments, medical bills, and living expenses.

My first goal is to pay off everyone and everything.

At the present time we're renting a home for $1300 a month.
My second goal is to use part of the money to purchase a home in full, meaning no monthly payment. I'm looking to spend under $500,000.

My third goal is to:
Put away towards an emergency fund.
Put away money for our two children.
Put away money for my retirement & my husband.
To invest the remaining amount.

I'm looking for a very good investment firm to work with. I've heard the bigger the firm the better. Are monthly fees tack onto obtaining help to manage your funds or portfolio?

Where can I search and find a list of large investment firms to work with? Do you have any in mind. I here a lot about Edward Jones? Also, I here its best to work with a registered investment company?

Can you please help?  

Answer
Although it may be easy to select a firm based on the "top 10" list, or through recommendations of a magazine article, it is really important that you find a personal financial advisor (regardless as to the size of your account) that will explain things to you so that you understand the things YOUR money is being invested in.

I would not necessarily recommend a full-service broker.  The fees are extremely large compared to discount brokers, and  full-service brokers have not shown historically that they can do any better at stock picking.

One website you can search for local financial advisors/planners is www.daveramsey.com and select their ELP for investment providers.

Keep in mind that financial planners are paid either by commission (money they get from the companies that offer the investments you choose) or by charging fees to their clients.  Commissions are more like hidden charges because they are not coming directly from you; however, they can influence the person to choose investments that are not good for you (but good for their pockets).

If you have a personal financial planner that is certified (a CFP), this will ensure that atleast the person has taken educational requirements and has met certain ethical standards.  You can visit www.cfp.net, which is the Certified Financial Planner Board's website.  You can search on this website for local CFP's.

A good planner will:
-try to understand your goals and your risk tolerance
-not guarantee any specific rate of return
-not ask you how much money you're going to invest in one of the first few questions
-not make you feel inferior because of your lack of investing knowledge. You should feel comfortable with this person.
-teach you
-help you create a written financial plan
-periodically review the progress of your investments compared to your goals, and suggest changes as necessary
-provide references
-tell you how he/she is paid
-not try to get you to make frequent trades when you're working toward long-term goals

Hopefully your planner will also explain to you that you can meet some of your goals without using them directly. For example, you can set up a 529 plan or Coverdell ESA for your children's college education.  The planner can explain to you how these work, but you can set up an account online directly with the provider.

You will also need the advice of a tax professional, because with the amount of money you will be investing, taxes can make a substantial difference.  The financial planner you choose will most likely be able to suggest one.