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What You Need to Know Before Selecting a Financial Advisor

Insurance and Risk Management Financial Planning Collaboration/ Meeting Attempt to Beat the Market Personal Finance Tax Planning Investment Performance Reporting Seek to Earn Market or Asset Class Return Security Education Planning Retirement Planning & Social Security Investment Philosophy & Strategy Software & Technology Services Provided 79.4% $702,248 of large cap core funds underperformed the S&P 500 benchmark over the Estate and Gift Planning Total returns lost on a $1 million portfolio over 20 years by a 1% fee'. Many advisors charge 1%, while only managing your five year period ending December 31, 2013 24/7/365 Investments A technology-focused advisor can bring your СЕРФ investments. entire financial world 1 Assumes a 1% fee charged quarterly in arrears and 7% annual returns before fees together in one place and provide you real-time access. He or she may also use web meeting technology to collaborate with you anytime, anywhere. CFA CFA Education & Credentials Commissions The Chartered $14,375 Financial Analyst (CFA) designation is the gold standard of the investment CPA/PFS Amount you'd pay in commissions if you invested $250,000 in a Commissions Compensation management field & Fees College Degree mutual fund with a 5.75% front-end load Fee-Only 87% 20% of investment advisor representatives are also affiliated with a broker-dealer (meaning they are allowed to charge both commissions and fees and are not required to act as a fiduciary at all times) of the more than 629,000 broker dealer representatives in the U.S. have between 1 to 5 disclosures on their record for complaints, violations, terminations, or judgments Verify Professional Certifications The 7 Things You Need to Know Before Choosing a Financial Advisor FINRA BrokerCheck Fiduciary Obligation to Clients Registration & Disciplinary SEC Investment Adviser Public Disclosure (IAPD) Suitability What type of technology does the advisor use? What education, credentials, or professional designations does the advisor hold? What services and advice does the advisor provide? • Some advisors only manage your investment portfolio. • Some advisors run paper offices and primarily handle everything in person or via snail mail. Education & Credentials Software & • Financial advisors come from all backgrounds and often start their careers in other related professions, such as accounting/tax, law, or finance. Services Provided Technology • Others provide comprehensive financial & retirement planning advice that goes well beyond investments. • Other advisors embrace technology, allowing them to deliver a similar experience to clients no matter where they live or work. • In addition to career experience, the advisor should have, at a minimum, a bachelor's degree from a respected university. • It's important to know what services you are receiving when working with an advisor so you can make an apples-to-apples comparison. • Often, these advisors will employ technology that provides their clients with real-time financial information, advanced performance reporting, and the ability to collaborate using web meeting software. • It is also wise to seek out an advisor who has obtained advanced credentials in the fields of investing and financial planning. The most widely known are the CFP.and CFA designations. How is the advisor compensated? • Most advisors sell mutual funds, insurance, and annuities and earn commissions by doing so. This creates a clear conflict of interest. What is the advisor's investment philosophy? Compensation 2$ • Other advisors are compensated exclusively for the advice and services they provide, just like a CPA or attorney. Investment Some advisors employ strategies that attempt to beat the stock or bond market. Does the advisor have any complaints or disciplinarý actions on their record? Philosophy & Strategy • Such advisors attempt to pick stocks, time the market, or choose fund managers who will outperform. Research shows that the odds of success with such a strategy are low. Registration & Disciplinary Although the vast majority of advisors are law-abiding professionals, an alarming number of them have complaints, regulatory violations, or other issues they are required to report on their record. • Such professionals are known as fee-only advisors because they do not earn commissions. • It's important to note that "fee-based" is not the same as "fee-only." Fee-based advisors actually earn commissions and charge fees. • Other advisors design portfolios that seek to earn the return of the market or asset class they are investing in. • Before working with an advisor, you should always check their history with the relevant regulator. • These portfolios are typically low cost, tax efficient, and widely diversified. Research demonstrates that this strategy provides clients with a high probability of outperforming most other investors. What obligations does the advisor have to me? • If they work for a broker-dealer, you can view their registration through FINRA BrokerCheck. • Advisors that work for a large bank, brokerage firm, or insurance company have minimal obligations to their clients. Obligation to Clients • For investment advisors, use the search function on the SEC Investment Adviser • Such advisors are free to recommend in-house products or investments that pay higher commissions, so long as they are deemed "suitable" for the investor. Public Disclosure (IAPD). • If an advisor holds themselves out as having a CFP®, CFA, or other professional designation, check to confirm they are in good-standing with the organization that confers the designation. • On the other hand, advisors that are employed by firms known as independent registered investment advisors (RIA) are required to always place their client's interest first. www @WealthEngineers in Wealth Engineers f WealthEngineersLLC • This is known as a fiduciary standard of care and is similar to a doctor-patient relationship. Sources FINRA, U.S. Securities and Exchange Commission, Source: FINRA, S&P Indices Versus Active Funds (SPĪVA®) U.S. Scorecard InvestmentNews, WEALTH ENGINEERS science | not speculation

What You Need to Know Before Selecting a Financial Advisor

shared by wealthengineers on Jul 25
Selecting the right financial advisor is an important decision. How do you know which advisors will place your interests above their own? How can you tell if an advisor is qualified to handle often c...


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