July 05, 2013 10:50 AM

DEAR MARY: I am a big fan of your column, and love the tips and advice that you share with us. My wife and I have recently received an inheritance that we want to be extremely careful with. How do I go about finding a competent and trustworthy advisor? Is there an unbiased source for information and evaluation of IRA plans and other investment vehicles? — Enthusiastically Yours, Gary.

DEAR GARY: You are certainly on the right track with 1) realizing your need for professional advice and 2) looking for “unbiased” advice, which to me means advice that is in your best interest, not the advisor’s.

Generally, financial advisors come in three flavors:

1. Commission-based. This means they do not charge you for their time and advice. Instead, they receive a commission on each of the products that they sell to you. This type of advisor is basically a salesman who will attempt to convince you that he or she has only your best interests in mind. But honestly, that is just about humanly impossible. A commission-based advisor is going to give you advice that will best serve him or her with a bigger paycheck.

2. Fee-based. This type of advisor does not earn a commission on any products that she recommends. Instead, a fee-based advisor either charges by the hour like an attorney or charges a fee that is based on a percentage of the client’s portfolio, like say 1 percent. Either way, this should be clearly disclosed upfront — ahead of time — to avoid any surprises.

3. Combo. Yes, the third type of planner is a combination of the first two. You pay a fee, either fixed or hourly, plus the planner earns commissions when you move forward with purchasing financial instruments with the advice you’ve paid for.

The fixed-fee-based planner is the type of professional I recommend. At a charge of several hundred dollars an hour or perhaps 1 percent of your assets, this will not be cheap. However, in this scenario, the planner has no incentive to sell you a particular investment, and if your portfolio grows, so does the planner’s annual fee, should you become a regular client.

Ask your friends and family to recommend a no-fee financial advisor to you. Or go to NAPFA.org, the National Association of Personal Financial Advisors, to locate a fee-based advisor near you.

I hope that helps, Gary. I wish you the best and applaud your desire to be extremely careful with this gift you’ve been given.

Do you have a question for Mary? Email her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630.

Mary Hunt is the founder of www.DebtProofLiving.com, a personal finance member website and the author of “7 Money Rules for Life,” released in 2012. To find out more about Mary and read her past columns, please visit the Creators webpage at www.creators.com.

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