Are you seeking financial advice or wondering how competent and objective your current advisor is?
I have a 50 year history in the financial industry, but I don’t do professional financial planning and investment management any more. But I do still want to use Alive and Well to guide people through the maze of opinions and options. Over the next few posts, I will convey what to consider when seeking financial help and the types of investment products you should consider.
Most of us begin looking for help by asking friends and family for the names of their trusted advisors. But there are a few things to consider about that kind of referral. Does the referral come from a person with a high degree of financial knowledge? Do they know enough about finances and investments to really discern if their trusted advisor is giving objective advice? Just because they like their advisor may not mean they are receiving the best advice. All financial advisors survive by learning good communication skills and are capable of appearing to have their clients’ best interests at heart.
The best financial planning advice I can give you is to find an advisor who is a CFP (Certified Financial Planner). This credential assures he/she has a decent amount of training and knowledge about planning and that they keep up with annual approved education in their profession.
When it comes to receiving investment advice, the most objective advice (and hopefully the best) comes from a Fee-only Registered Investment Advisor (RIA). A fee only advisor does not offer any securities for sale or receive any compensation for recommending one investment over another. They will not be connected to a brokerage firm. You will not find a fee-only investment advisor who has a statement on their business card like: “Securities offered through XYZ securities firm.”
One problem with finding a fee only advisor is that they usually require at least a minimum of $250,000 of investable assets for them to manage your money. The fee they charge is either hourly or a percent of assets under management.
If you don’t have that amount of money you may have to rely on someone who works for a securities firm and who receives compensation for the investments they recommend. In that case, you need to search for an advisor with a reputation for honesty and integrity. Whether or not you have more than $250K to invest, email me and I can give you a couple of sources for receiving both financial and investment advice at a very reasonable price.
This is just a very brief overview of the issues involved in choosing an advisor. If you have further questions please email me at Jerry@AliveWell.org. I will address types of investment products in another post.
-Jerry