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The Secrets To Choosing An Advisor
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Added: 04/10/2004
Type: Summary
Viewed: 493 time(s)
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The Secrets To Choosing An Advisor
Choosing a financial advisor if full of risk. You will be entrusting them with your hard-earned dollars. For many, it is a decision they quickly regret. In the next 3 articles, I will share the secrets to choosing an advisor that’s just right for you. It takes a little work, but can result in a relationship that will yield dividends for years to come.
In this article, I want to help you clarify what you want in an advisor and how to begin the search process. In future articles, I will discuss the difference between passive and active management philosophies, and how an advisor’s compensation can affect your relationship--and your wallet!
The process of selecting an advisor should begin by asking yourself, “What do I want an advisor to do for me?” The better you define what you are looking for the easier it will be to tell if an advisor is right for you.
Keep in mind that knowledge is power. The more you know the less likely someone will be able to take advantage of you. Do research. This will be a long-term relationship so it’s worth the effort to get it right. The internet is a wonderful tool to quickly and easily find out more about a company, the products they offer, their management style and even an individual advisor. You can also request additional information. This research will allow you to greatly narrow your search.
If you want someone to look at your overall financial situation and provide advice, I recommend someone with the Certified Financial PlannerTM (CFP) designation. CFPTMs have undergone extensive coursework and have passed a rigorous exam based on their ability to apply that knowledge in real-world situations. A CFPTM will have the ability to help you coordinate the various aspects of your financial life including estate, investments, insurance, education and tax planning.
Just because someone is a CFPTM, though, doesn’t mean they’re right for you. You will still want to research their company, the types of products they sell and how they are compensated because these can color the advice you receive. For example, most banks, brokerage firms and insurance companies now offer financial planning services provided by CFPTMs. Usually these plans are free because the companies know that you are more likely to buy their commission-based products if they provide your plan. So beware, they use the financial plan as a sales tool.
Selecting an advisor to help manage your investment portfolio also requires thought and research. Before you talk to any advisors, try to define what you expect from the advisor during the initial phase when your situation is reviewed and investments are recommended. What about after that? Do you expect your advisor to closely watch each of your investments and to take action when needed? Many don’t.
Decide if you want an advisor who passively manages your account—who follows a ‘throw it in the drawer and forget about it’ approach--or one who actively manages it. There is a big difference, especially if you expect them to take action to protect your money if the market goes down.
Once your goals are clarified it is time to start the interview and research process. Ask questions about the processes and procedures the advisor uses to select investments and to monitor them after selection. What assurances do you have that they will take action? Ask them for specific investment recommendations. How many clients has the advisor lost in the last few years?
Find out how much they will make off of the transaction and lastly, get and check their references. Ask each reference specific questions about the actions taken by the advisor during recent declines. Find out how often the advisor has adjusted their portfolio based on changes in the market and economy.
You will also want to understand the advisors investment style. What makes what they do unique? If they offer the same thing as everyone else, why work with them?
These steps won’t guarantee that you’ll find your perfect advisor, but they’ll give you a good place to start. If you have any questions feel free to contact me.
Mr. Voudrie is a Certified Financial Planner and the President of Legacy Planning Group, Inc., a Private Wealth Management firm in Johnson City, TN. His firm employs proprietary strategies designed to protect your investment and grow your wealth without locking you into years of surrender penalties. For more information call 1-877-827-1463 or email jeff@guardingyourwealth.com.
Looking for an energetic expert who is passionate about financial and wealth management? Mr. Voudrie is an excellent speaker who will excite and inspire your audience. Mr. Voudrie is available for a limited number of speaking engagements, television appearances and radio talk shows. For booking information, contact Christine Lavender at (877) 827-1463 or email christine@guardingyourwealth.com.
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