What Should You Look For In a Financial Planning Firm, Wealth Manager and / or Financial Advisor?

Just a few items to have on your check list:

* Review the advisor’s methodology prior to committing your time, efforts and most importantly your hard earned investment dollars.
* Ask for a copy of all compensation, fee and/or commission schedules.
* Ask if they have been subject to any legal and/or disciplinary actions or have received any client complaints in the past.
* Is the financial advisor using an institution to “clear” or execute trades?  If so, become familiar with that institution and double-check the fees associated with this activity.  Know all the details first…

* Ask for their current client list of references, specifically from clients who have similar retirement goals as yours.
* Inquire about the financial advisor’s education, industry experiences, professional affiliations, credentials and general background.
* Make sure any financial planner and/or wealth advisor you are meeting with is properly licensed, bonded and insured in the states where they do business.

What is a financial advisor’s Fiduciary Duty? 

A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary (from Wikipedia).  Do you know what it means to you?

NOTE: Some experts recommend contacting 2-3 financial advisors or financial planning firms, so that one may compare/contrast each firm, thus making the best-qualified choice for you & your loved ones. 

Best wishes in your search. 
The AllFinancialAdvisors.com Team

 
There is an ongoing debate in the securities industry about the extent to which insurance agents are qualified (and should be sought out) to provide investment advice.

Because of products like annuities – which are financial products that accept investors’ money in exchange for securing a steady future (or immediate) cash flow, and are often used for retirement saving – fast-talking insurance agents have been known to blur the lines between financial advisory and insurance.

While annuities can be an excellent addition to any investor’s retirement plan, let’s face it – insurance is a business driven by sales commissions.  Insurance agents are definitely NOT financial advisors. 

Insurance agents will often tout and/or promote the insurance products that charge the highest fees and generate the greatest sales commissions – NOT products that an independent advisor would likely recommended, especially if those financial advisors are bound by a fiduciary duty and are seeking the best interest of their clients.

So when making your retirement decisions, or if you’re considering purchasing an annuity product, we recommend you work with independent financial advisors whose primary goal is to protect and grow your wealth.

While insurance or annuities may be a part of your financial plan or investment portfolio, your finances and retirement planning should not be left to an insurance salesman.

In addition to investment expertise, and ideally objective advice, financial advisors will be able to advise you on the most appropriate insurance or annuity products, and can often provide insight regarding those products that are safest and have the lowest fees.

We also recommend choosing 2-3 financial advisors to interview before selecting one to work with.  This will allow you to see the various expertise each advisor has and give you choices to base this very important decision on.  A decision that will most likely be one of the major ‘partnering’ decisions in your retirement years… 

We hope this helps!  Thanks.  The AllFinancialAdvisors.com team.

Financial Advisor Accountability and Incentives: Performance-Based Fees

Performance-based fees have always been a staple of the hedge fund industry, providing wealthy investors with the comfort of knowing that their money managers have a personal incentive to outperform the market.

The famous “two-and-twenty” fee structure refers to hedge fund managers taking 2% of assets under management as a base fee, and in addition taking 20% of all returns that exceed or outperform a given benchmark (such as the S&P 500) or a “high water mark”  (the highest net asset value previously seen at the end of the fiscal year). 

Mutual funds and financial advisors, for the most part, do not embrace the performance-based fee structure, and simply take a fixed fee based upon clients’ assets under management [AUM] – meaning they charge the same fee regardless of whether their fund (or investment) tanks or beats the market.

Given the obvious and mutually beneficial value of employing such a fee structure, more and more investors are seeking out financial advisors and investment advisors that offer performance-based fees.

Why shouldn’t ordinary investors be able to invest the way the wealthy do?

After all, there is a certain feeling of injustice in knowing that your financial advisor or money manager is raking in the same amount of fees win or lose. Performance-based fees help ensure that your financial advisor is sharing the profit – and the pain – of the investments they are making on your behalf.

While performance-based fees appeal to all investors seeking a financial advisor, there are currently restrictions on what types of investors can be charged such fees.

Under the Advisers Act of 1940 (the Advisers Act), RIAs (Registered Investment Advisors, which include most financial advisers) can only charge performance-based fees to “Qualified Clients.”

“Qualified Clients” are currently defined (under Rule 205-3) as clients who have assets under management with the RIA of $750,000 or more, and clients who have a net worth of $1.5 million or more.

However, as the demand for performance-based fees increases among investors of all types, we can expect that in the future, performance-based fee investments may become available to a wider range of investors.

We hope this helps.  Let us know. 
Thanks — The All Financial Advisors Team

We have selected only the top financial planning professionals in the U.S. with which to work.  The Financial Advisors in our directory are all independent, Registered Investment Advisors (RIAs) managed by FINRA and the SEC (United States Securities and Exchange Commission).

Financial Advisors have varied experiences, education, and specializations.  Finding the right financial planning firm and/or financial advisor takes the right research.  It takes trust in the source.

Our financial advisors take fiduciary oaths and pledge to uphold the highest standard of ethics.  Many of the financial planners within our directory explain how their financial planning process works within their profiles.  After reviewing their profile pages, you can request a fee schedule, more detailed information and/or a meeting.

Many of our advisors are members of the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning) and the Financial Planning Association (FPA).

Using the services of a qualified financial advisor and/or Wealth Manager (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably!

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

10 Questions to Ask When Considering a Financial Advisor

So you’ve decided to hire a financial advisor to help you define and meet your financial goals. Now what? How do you find the right advisor, and how do you make sure you’re entrusting your finances to someone competent and ethical?

As with any major life decision, get all the facts first. Meet with several different financial advisors, and ask questions to see who’s the best fit. There should be no charge for this getting-to-know-you appointment — and if there is, that’s a clear indication to move on! Use the following questions as a starting point, and tailor them to your own unique situation.

1. What is your background? Just as you wouldn’t hire someone to watch your kids without checking into their background, don’t hire a financial advisor unless you know about his or her past. Has the advisor ever been subject to disciplinary action? Listen to what he or she has to say, but do your homework, too. You can go to the Financial Industry Regulatory Authority (FINRA) BrokerCheck, a handy free tool that will give you background information on any current or former FINRA-registered brokerage firm or broker. The U.S. Securities and Exchange Commission (SEC) Investment Adviser Search is also free and provides a wealth of information as well.
2. How much experience do you have? You want to know your financial advisor’s training, experience and area of specialization fit your specific needs. How long has the advisor been practicing? What is the scope of his or her practice? Get as detailed as you need to in order to know whether the financial advisor’s experience meets your requirements.
3. What is your investment/financial planning philosophy? If the answer to this question doesn’t match your own philosophy, if it’s too risky or not risky enough, or if it just plain doesn’t make sense to you, keep looking.
4. What are your credentials? Check out the various credentials and designations available to financial planners, and know going in which ones you’d prefer your financial planner to have. Read our FAQ topic “What Professional Certifications are Available for RIAs?” to get a thorough understanding of this topic.
5. How do you get paid? We’ve covered the significance of fee-only advisors in our blog post, “Should You Choose a Fee-Only or Fee-Based Financial Advisor?” Ideally, that’s your financial planner’s fee structure as well. But even if you’re comfortable with your financial advisor working on a commission basis, find out all the facts. Is he or she affiliated in any way (especially in terms of compensation) with any of the products, services or companies he or she recommends to clients? Does the advisor receive any gifts or incentives from third parties? These things don’t necessarily mean the advisor will recommend products or services you don’t need, but they can indicate a conflict of interest — the advisor’s vs. yours.
6. Are you a fiduciary? A fiduciary has sworn an oath to act in his or her clients’ best interests. When it comes to your money, you definitely want someone who must look after your best interests at all times!
7. Who is your typical client? You don’t want names here, you want a profile. If you’re a single, professional woman in her early thirties with the goal of paying off debt and buying a house in the next five years, an advisor whose clients are all wealthy Baby Boomers may not be the best fit for you.
8. What exactly will you do for me? Have the financial advisor explain precisely what he or she envisions to help you meet your financial goals. Then get it in writing, along with a clear explanation of his or her fee structure. If an advisor isn’t willing to put it in writing, there’s a reason — and that’s a good enough reason for you to move on to the next candidate.
9. Do you have references? Ask to speak to some of the advisor’s clients whose situations, finances and/or goals are similar to yours. See what they have to say, then ask them if they know other clients of the advisor. The goal is to talk to clients the advisor hasn’t spoon-fed you and find out how they feel about the service the financial advisor provides.
10. How do you keep me updated on my investments? If you want a financial planner who is accessible via e-mail and phone, make that clear. If you want your financial advisor to check in with you monthly or quarterly to talk about your portfolio and your plans, speak up about that, too. Find an advisor who provides the level of communication you need to feel comfortable.

Again, these questions aren’t the be-all and end-all of choosing a financial advisor, but taken as a whole, they should give you a picture of the person you’re talking to. There are no guarantees, but if you do your due diligence in vetting anyone who might end up working with your hard-earned money, you’ll likely sleep better at night.

According to a study released today by the Certified Financial Planner Board of Standards Inc., Americans are more concerned about their money now than they were when things started going south–but we’re less likely to hire a financial advisor to help us do something about it.

First, the good news. The study, which questioned 1,002 people over 18 earlier this month, showed we are optimistic about economic recovery: A full 66% of respondents believe the U.S. economy will hold steady or show improvement in the next six months. Even more–83%–think their own finances will do the same.

At the same time, 65% of survey respondents are more worried about their finances now than they were two years ago. We can do some armchair quarterbacking and conclude that’s likely because so many Americans have weathered some really tough circumstances during the economic crisis, including job losses, extended unemployment, depleted savings, foreclosures and bankruptcy. Of course they’re concerned. The study also found most people feel the government needs to do more to deal with the far-reaching effects of the economic meltdown.

Most Americans describe their current outlook on their finances as “cautious,” and they say their biggest financial planning concerns right now are retirement, saving and education, not choosing stocks or cash management. Again, that’s consistent with the hypothesis that most people’s savings have taken hits during the last two years.

But here’s the really interesting part: More Americans than not, feel financial advisors are more important than they were two years ago, and those who do have financial planners are more confident about their finances than are those who don’t.

But only 28% of survey respondents actually have a financial planner. More than two-thirds of people, while acknowledging the need for a financial planner, haven’t followed through and gotten one!

So what’s holding you back? 
If you feel a financial advisor is important but don’t yet have one, what is the biggest reason?  Is it a trust issue?  Not sure how to go about finding the right advisor?  Uncertain how a financial advisor can help you if you’re not already wealthy? Something else entirely?  Time to ACT NOW!

We’d love to hear your responses!

Financial Advisors have varied experiences, education, and specializations.  Finding the right financial planning firm and/or financial advisor takes the right research.  It takes trust in the source.

We have selected only the top financial planning professionals in the U.S. with which to work.  The Financial Advisors in our directory are all independent, Registered Investment Advisors (RIAs) managed by FINRA and the SEC (United States Securities and Exchange Commission).

Our financial advisors take fiduciary oaths and pledge to uphold the highest standard of ethics.  Many of the financial planners within our directory explain how their financial planning process works within their profiles.  After reviewing their profile pages, you can request a fee schedule, more detailed information and/or a meeting.

Many of our advisors are members of the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning) and the Financial Planning Association (FPA).

Using the services of a qualified financial advisor (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably!

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

What Should You Look For In a Financial Advisor or Financial Planner?

* Ask if they have been subject to any disciplinary actions or have received any client complaints in the past.
* Ask for a copy of all compensation, fee and/or commission schedules.
* Ask for references, specifically from clients who have similar goals as yours.
* Inquire about the financial advisor’s experience, education, professional affiliations, credentials and general background.
* Make sure the financial advisor is properly licensed, bonded and insured in the states where they do business.
* Review the advisor’s methodology prior to committing your investment.
* Is the financial advisor using an institution to “clear” or execute trades?  If so, become familiar with that institution and double-check the fees associated with this activity.  There may be hefty ”commissions” involved.

NOTE: Some experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

What Is Fiduciary Duty?  A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary (Wikipedia).

What Makes A Quality Financial Advisor:

Financial Advisors have varied experiences, education, and specializations.  Finding the right financial planning firm and/or financial advisor takes the right research.  It takes trust in the source.

We have selected only the top financial planning professionals in the U.S. with which to work.  The Financial Advisors in our directory are all independent, Registered Investment Advisors (RIAs) managed by FINRA and the SEC (United States Securities and Exchange Commission).

Our financial advisors take fiduciary oaths and pledge to uphold the highest standard of ethics.  Many of the financial planners within our directory explain how their financial planning process works within their profiles.  After reviewing their profile pages, you can request a fee schedule, more detailed information and/or a meeting. 

Many of our advisors are members of the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning) and the Financial Planning Association (FPA).

More Info: Financial Advisors

Thinking of Switching Advisors?

First, organize your financial paperwork, review your portfolio, and then conduct research to the type of advisor or wealth manager you might need.

Just over 40% of consumers surveyed in the US in January / February 2009, say they are ready to switch from their current advisor.  This trend is due to the size of the client base that large advisory firms have been carrying for the past 4-5 years.

Second, look for the right size firm — that has a similar investment philosophy to yours.  Sometimes the best firm is not in your immediate area! 

Good luck with your search for a financial advisor: