Finding a financial planner and investment advisor with whom you are comfortable can be an overwhelming task. With such a wide array of unregulated titles, where does one start? It is our hope that the questions below will aid you in making a prudent decision in selecting an ethical, competent, and trustworthy financial advisor.
TOP 5 QUESTIONS TO ASK YOUR ADVISOR:
1. ARE YOU A FIDUCIARY?
Registered Investment Advisors (RIA), such as FIDELIS iM are legally required to act as a fiduciary. It is estimated that less than 10% of “advisors” are fiduciaries. A financial planner held to a fiduciary standard occupies a position of special trust and confidence when working with a client. Most advisors that sell funds, annuities, or other financial products are not fiduciaries. Make sure you are working with a Registered Investment Advisor.
2. WHAT CONFLICTS OF INTEREST ARE PRESENT?
Ask your financial planner to provide you with a description of his/her conflicts of interest. For example, financial planners who sell insurance policies, securities, or mutual funds have a business relationship with the companies that provide these financial products. They have an incentive to promote products and services to maximize income. Their loyalty is to their company, not to their client.
3. WHAT PROFESSIONAL QUALIFICATIONS DO YOU HAVE?
The attainment of professional credentials shows a commitment to professional growth, and a commitment to providing you with prudent financial advice. Ask your advisor what qualifies him or her to offer financial planning advice and whether he/she is recognized as a Certified Financial PlannerTM professional.
4. WILL YOU HAVE CUSTODY OF MY ASSETS?
The common denominator in most Ponzi schemes has been a lack of an independent custodian. An independent custodian offers you the protection that your assets are being managed but not held by the advisor. Make sure your assets are held at a reputable, independent custodian such as Charles Schwab or TD Ameritrade.
5. HOW WILL I PAY FOR YOUR SERVICES?
It is important to know how your advisor is being compensated. The easiest way to avoid conflicts of interest is to avoid commissioned salespeople. By working with a Fee-Only advisor, you have placed yourself on the same team as your advisor. When an advisor is paid a management fee, the incentive is to grow your assets; a win/win situation for both parties.
If you have questions about our investment management services, how to select a financial advisor or would like a complimentary portfolio review, feel free to contact us at 541-770-1311 today.