A widow just shy of her 90th birthday recently asked me to review her investment portfolio. This happens a lot: Much of my practice involves giving second opinions to other financial planners' clients.

See also: Is your money fund safe?

This widow had a reason to worry. She had been sold two expensive annuities — just about the last thing a 90-year-old needs — and the rest of her portfolio consisted mostly of risky stock funds and junk bond funds. The planner was making a fortune as the widow's nest egg dwindled.

What is your financial planner doing with your money? — R. Kikuo Johnson

A natural reaction would be to file this story next to that of Bernie Madoff or other brazen crooks. But that would be too easy. Like every financial planner I know, the widow's adviser really seemed to believe that she was doing her client a great service. In fact, she considered her a dear friend.

My point is this: Bad advice is epidemic in my industry, and it doesn't come only from villainous fraudsters such as Madoff. It also comes from pleasant, empathetic folks who are merely responding predictably to my industry's perverse incentives and self-serving ethical standards.
 
We financial planners are masters at persuading ourselves that what's in our best interest also happens to be the moral thing to do. By and large, we're good people, which is why we can be so convincing — and so potentially dangerous to your money.

Who I am

I spent 20 years in the business world as a corporate finance officer before becoming a personal planner more than a decade ago. I started my practice because I knew that a lot of the advice families got was mediocre or worse, and I hoped that I could help counteract that.
 
That's also why I write very candidly about how this profession works, and what you should know about it before you seek advice from me or any other planner. (This article isn't a plea for business: I have a long waiting list and don't need to advertise.)

For two years I penned these insights anonymously in a column called The Mole in Money magazine; today I write for the website CBS MoneyWatch and elsewhere, often giving an insider's view of my industry and how it treats its clients.

Sad to say, the worst cases often involve older clients. We planners target you because you have the largest nest eggs, and the more money we manage, the bigger our take. Also — and let me be frank here — you often view your money more emotionally than younger people do, because you have so much at stake. And that makes you vulnerable.

Next: What do financial planners need from you? »