Questions You Should Ask… Answers You Should Expect

Many firms call their services wealth management but really only provide investment management with some window dressing. That may be what you seek. But if what you require is wealth management defined as integrated financial planning, of which investment planning is just one important component, you will want to dive deeper. Wealth management should also include retirement, estate, income tax, corporate executive, business succession, and insurance/risk management planning. If these are services you require, be sure your advisor has the professional skills and experience to provide them.

Ask to see sample output such as sample investment update reports and cash flow pro forma that are critical to making investment, retirement, estate, and tax planning decisions. Ask about the frequency of reporting and contact. Additionally, ask who will be on your service team, so you are assured that you can always speak to professional staff members who are intimately familiar with your affairs.

Do they consider and report on investment assets, which are held or managed by other firms – for instance in your retirement plan? In order to properly allocate a client’s portfolio for optimum outcomes, all assets must be considered as a whole.

Do you pay one fee for everything, or is it a la carte? Does the firm receive compensation from any other financial institutions for services they provide to you? Do they disclose any and all of these fees? All fees should be spelled out, as well as how you will pay the firm for their services. You should pay for your services directly and transparently.

All investment advisors have a custodial firm, who handles trades, holds securities, collects dividends, produces statements and tax information, issues checks and the like. Bernie Madoff’s custodian was owned by him; thus, there were no checks and balances. Make sure you choose a firm with an independent and very financially sound custodian. Broker Dealers provide Independent Registered Representatives with varying levels of support, execution and compliance. Advisors using a broker dealer either do business under their own firm name or that of the mothership – LPL for instance. As with custodians, make sure that the Broker Dealer is financially sound with a history of industry compliance.

Quality firms should be staffed by professionals with industry credentials including but not limited to CERTIFIED FINANCIAL PLANNER (CFP®), Chartered Financial Analyst (CFA®), Personal Financial Specialist (PFS), Certified Public Accountant (CPA), Masters in Business Administration (MBA), Accredited Portfolio Management Advisor (APMA®), Accredited Estate Planner (AEP®), Chartered Mutual Fund Counselor (CMFC®), Accredited Wealth Management Advisor (AWMA®), and Accredited Investment Fiduciary (AIF®).

A greater numbers of years of experience is important, but equally — if not more important — is turnover. An advisory relationship is very personal. Maintaining continuity of relationships is critical to successful long-term relationships.

Of course this is important to know, and you can find this by searching the links above for SEC or FINRA regulated advisors.