4 Things You Must Know Before Hiring a Financial Advisor 2016

1. Are You a Fiduciary?

Most people have the common misconception that all financial advisors must always act in the best interest of their clients. Unfortunately, this is not the case at all. In fact, only a small percentage of advisors actually practice strictly as fiduciaries. Why is this so important? By law, a fiduciary must always act in the client’s (your) best interest.

The easiest way to determine this is to ask the advisor how they get paid. As a fiduciary, I’m paid a flat fee as a percentage of the assets I manage or based on the financial plan that I complete. I don’t receive commission-based on the investments I recommend.

Beware that some advisors practice as “hybrid” registered investment advisors (RIA). This means that at times they will act as a fiduciary and others they can practice under a lesser standard (suitability). While this is a convenient registration as it allows them to sell insurance and other commission based products to their clients and/or charge a flat fee, it also can blur the lines of whose interest (yours or theirs) takes priority and when.

If your advisor is a “hybrid” RIA and they recommend investments that charge a commission you have the right to ask them how much they receive in commission based on you investing in the product. To take it a step further, ask them why this product is better than others along with a table that includes a break down of the analysis they performed with similar products.

2. What is Your Area of Expertise?

The world of financial advising is unnecessarily complicated. The professional recommending auto insurance can call themselves a financial planner while a hedge fund manager may call themselves the same thing. Unfortunately there is no law ruling against this. However, what’s the difference?

One is an expert in property and casualty protection and the nuances of protecting your assets using different insurance companies and policy riders. The other is a wiz at implementing strategies and purchasing securities to mitigate investment risk. Two distinct specialties, but both may use the same title.

When hiring a professional to help you accomplish your financial goals understand what their area of focus is. This is especially helpful to understand their capabilities and limits. It will also help you better understand if you should keep all of your assets with this one person or company.

When I worked as an insurance advisor I would frequently try to upsell clients to open an IRA or investment account with me. In doing so I could then help them diversify their investments between insurance and securities while making money from the mutual funds or ETFs they invested in. In some cases this made sense, but for more complicated cases I found myself out of my league.

Be up front with your advisor to find out what focus they can assist you with. While it may be convenient for you to keep all of your assets with one professional, it may not be your most cost efficient choice or quickest path to achieving your goals.

3. How Does Your Advice Fit in My Financial Plan?

Every person needs a financial plan. It doesn’t matter if your goals are to pay off student loan debt, buy a home or to make your portfolio last your lifetime.

The easiest way to accomplish your goals is to measure your activity and track your progress. Why do you think professional boxers weigh themselves every day? They want to know each day if they are overweight so they can take specific actions to meet their target. Your financial goals should be approached using the same technique: precise measurements.

During your first meetings an advisor may stress how their product or strategy can help you take the fast lane to your financial goals, but the easiest way to clearly see if this is true is by reviewing their advice within a financial plan.

Doing so will allow you to see how their advice affects other areas of your life such as income, taxes, legacy, etc. More importantly, it will give you a benchmark to review with any other financial professional who may be assisting you and to revisit at your next meeting with that advisor recommending their solution.

4. Where will my money be held?

Remember that Bernie Madoff guy? He was the one who was able to keep a ponzi scheme (paying old investors off with new investors money) going for at least two decades while stealing several billion dollars. How was he able to do so for so long?

The most significant reason is because his firm served as the investment advisor and custodian. This means that he not only chose the securities his clients invested in, but he also kept possession of the money within his firm.

The easiest way to protect yourself from ever becoming victim of a ponzi scheme is to make sure your advisor places your funds with a third party custodian. Most RIAs will use one of the major custodians such as Charles Schwab, Vanguard, TD Ameritrade or Fidelity.

Placing your money in these firms puts a firewall between your advisor and your account. That means they will be able to make adjustments to what type of securities you invest in and the amount in each, but will not be able to withdraw funds without your permission. Even better, the custodian will provide a statement, typically monthly that allows you to keep track of the activity and balance (if you decide to open it).

Another quick way to protect your money is to NEVER write a check to the advisor themselves. This is a big red flag that should always be avoided.

There are several other areas to focus on when selecting your advisor, but these are the core concerns anyone should be familiar with. Remember, it’s your money and your future. The biggest complaint I hear from clients when we begin working together is that they are reluctant to make changes that are in their best interest because they have been burned in the past by other advisors. Don’t let your dreams fall victim to an unscrupulous advisor, be knowledgeable and protect yourself.

5 Questions You Should Ask Your Financial Advisor 2017

Managing your wealth, no matter how big or small, is a cumbersome task. Your financial advisor helps to keep your money safe while making it work for you. Before you start working with someone, ask them these important questions.

What Certifications Do You Have?

You need to know what licenses and certification your financial advisor has. Most of the top consultants are certified public accountants, fund specialists, consultants, or analysts. Some even carry a Juris doctorate and insurance licenses. While everyone has to start somewhere, you want to work with a firm that has extensive experience in the field.

What Safeguards Are in Place to Protect Assets from Fraud?

Your assets need to be protected by a reputable custodian. When you ask about safeguards, you should also ask about any infractions he or she has received in the past both with the firm and as an individual. To provide you with the best service, your financial advisor should be a fiduciary.

Consultants with a strict code of ethics have standards that they share with their clients. However, no matter their standards, they should be in compliance with Financial Industry Regulatory Authority, state and regulatory agencies, and the Security’s and Exchange Commission.

What Are Your Fees?

When it comes to fees, your counselor should be 100 percent transparent. He or she needs to explain his or her exact fee structure, so you understand how you are paying. Some are fee-only, meaning they provide a flat rate for services rendered.

Some investment consultants charge a commission fee. That means they make money off each product you purchase to help your investments grow. It is important to know which one you are working with, or if you are with someone who charges a fee in addition to earning commissions.

What Access Do You Have to Earning Reports?

As your financial advisor, he or she should have direct access to the top holdings of where your investments are. He or she needs to be able to tell you immediately what the earnings report is anytime you call.

At the very least, he or she should be able to educate you on your holdings before any investment of assets. By educating you on available options and what assets are invested, you can better understand what the consultant suggests.

How Often Do You Communicate

When it comes to letting you know how your money is doing, the counselor should be open to communication. He or she should send out weekly announcements about the market. Also, you must be informed of trade notifications immediately and receive an explanation on every buy and sell option. Most firms also send out information about their monthly investment outlook as well as a quarterly outlook. Brokers also offer to keep their customers informed with educational information and fact sheets.

Ask the tough questions of a financial advisor before asking him or her to manage your funds. It helps you to weed out the inexperienced and shady consultants before losing any money.

5 Services Offered By Financial Services Companies 2017 to Help Retirees

A lot of financial services companies are highly sought after by people who wish to retire and spend the rest of their days with comfort. Retirement planning at an early age can help you to see amazing returns on your investments. With early planning, you can ensure that all the assets you accumulate over the period of earning can be distributed properly during the lifetime as well as afterwards. If you dream of retiring to a life of luxury and leisure, these companies can help you achieve that dream with the following 5 services.

Retirement Planning

A lot of people tend to begin planning for their own retirement much ahead in life. But there are also numerous individuals who have a lot of obligations in life. These keep them from making a proper plan due to restrictions on money and time. Such people can get assistance from companies which have specialty in retirement support. These companies offer varied financial services which can let them begin on a path of financial steadiness and security.

Professional Investments

There are some people who are masters at investing in stocks and businesses. Such individuals might not ever require advices in professional investments. But the economic market has always been a volatile one. Due to this reason, people seek help from top financial companies that can assist them to invest in proper stocks and make the right financial decision. This can help future retirees to make use of accounts for additional revenue rather than allowing them to grow interest at a rather gradual pace.

Tax Assistance

Taxes are applicable on any profits which are received from investments. Retirement agencies assist future retirees in witnessing higher returns on the investments by explaining to them how tax payments can impact different retirement plans. Tax payments, in plenty of cases, can make your days of retirement not only comfortable but luxurious as well. Naturally, it is essential for future retirees to understand the most suitable options. This is due to the fact that tax payments will enter the picture unavoidably.

Insurance Services

Everyone wishes to be as fit during the time of retirement as during their younger and healthier days. However, health naturally takes a downturn with advancing age. Companies specializing in retirement planning can use insurance services to assist future retirees. With the financial services offered by these agencies, they can offer financial support their dear ones in case of unpredictable situations associated to their health. With age, people get vulnerable to various diseases – which can be a drain on their finances due to excessive medical expenses.

Estate Planning

For people who are fortunate to retire with solid finances and create a healthy investment portfolio by that time, it is important to ultimately hand over the spoils to their family members, loved ones, charities etc. Companies which provide commercial services can help retirees in estate planning and transitioning by offering them advice regarding the ideal ways to distribute their assets among dear ones or finding where they should distribute the rest of their estate to.

Things You Must Know About Financial Services 2017

Financial services refer to the services provided by the finance industry. Also, this term is used to describe organizations dealing with the management of money, like credit card companies, insurance firms, investment banks, stock brokerages, and banks. These are the types of firms that compromise the market, providing a wide range of investment and money-related services. In terms of earnings, financial services are considered the largest market resource in the world.

Important Things You Must Be Aware Of

Generally, these services are not limited to the field of deposit-withdrawal, investment, and loan services; but rather in the fields of estate, securities, insurance, trust services, and all forms of financial intermediation like the distribution of financial products as well.

Every day, the needs and expectations of consumers are growing. Hence, making the mark in boosting personal wealth becomes a necessity. Intense competition has cuddled market margins as well as forced plenty of companies to cut costs whilst improving the quality of customer choice and service.

As most organizations are striving to be more entrepreneurial and innovative, the war for talent is escalating. And as the products become more complex and the business environment more uncertain, the risks increase. At the same time, rules and regulation are the tightening highlight within the reach of government and public pressure for improved transparency, supremacy, and accountability.

Today, the winners are those firms transforming the challenges into opportunities to establish more enduring and stronger customer relationships, unlock creativity and talent, and to sharpen their process efficiency. Apart from that, these companies also view these challenges as a means to boost their risk management processes so they can deliver more sustainable returns. Furthermore, they use used regulatory demands as a catalyst for improving market confidence and strengthening the business.

The challenges in the financial services market are indeed forcing the participants to keep pace with technological advances, as well as to be more efficient and proactive whilst reducing risks and costs.

Today, there are already a lot of companies working hand in hand with reputable financial organizations around the world to develop a very sound networking strategy for connecting firms with suppliers, employees, partners, and customers.

Indeed, the financial services market is dynamic and diverse. There are plenty of important things you must be aware of to better understand how such industry operates. It is certainly an ever-changing, high-growth, and versatile market. Businesses with various needs must know that such market offers several selections of suitable financial services.