***How Boomers Can Choose the BEST Financial Advisor

By: Kelly Campbell, CFP, ChFC, CMFC

After a turbulent 2008 stock market, many investors are questioning their financial advisors value. As a matter of fact, many will seek a new advisor in the years to come. And while this may seem a daunting task, it may be the best time. New relationships often lead to new investment plans and significant portfolio changes potentially for the better.

But how do you choose the Best Wealth Management Firm? Here are the top 10 questions to ask about a new financial planner before you transfer your account.

1. How many clients does he personally serve and what kind of information does he need before working with you?

In other words, is the Advisor more conce
ed about your money and a new account than he is about you? Many brokers are more conce
ed with having another account versus who you are as a person. This is a very personal relationship and Advisors should be asking about your goals and dreams instead of about your account values. Ultimate success is not in a rate of return, it is in you being able to achieve your dreams. Choose the planner that asks both quantitative questions as well as qualitative questions…..hopefully more qualitative.

The BEST financial advisor will be more interested in who you are and what you want out of life.

2. Is he a stock picker, trying to find next year’s stellar performer?

Often a broker may be able to find a stock that goes up by 100%+. But this usually in conjunction with finding many others that go no where as well as those that lose all of their value making the overall portfolio return dismal. Choosing pooled investments is a better approach. These types of investments could be mutual funds (but make sure your broker is very selective as many funds do not beat their relative index returns and still further, many are very tax inefficient) or Exchange Traded Funds (ETFs can be more tax efficient and enhanced indexing techniques utilized by some ETF companies can out perform the index more often). Stock picking simply does not work. If your broker is a stock picker he has to make two correct decisions, when to buy (low) and when to sell (high). It is often difficult enough to make one of those decisions correctly. Stay away from stock pickers.

The BEST financial advisor will be the one that realizes that stock picking is better left to either the professional money manager or done with a systematic approach such as indexing.

3. Does he have a system for choosing investments/making portfolio decisions….and does he follow the system closely?

Most brokers think they are market analysts but reality will show that they spend a majority of their time marketing for new clients. It is OK that the broker needs to market, he has to keep his business in the black. But if he is making portfolio decisions without a system, he needs to watch the market continuously. How can he do that when he is making sales calls? If he must watch the market continuously, he is a stock picker and we know about stock pickers.

The BEST financial advisor will have a system for all investment planning and buy/sell decisions.

4. Will you receive a writte
Investment Policy Statement?

The best planning is done by having things in writing. An investment policy statement is a document that describes portfolio risk, the degree of potential portfolio losses in the market (usually set as a range of highs and lows), what types of investments will be included in the portfolio, an approximation of the expected rate of return as well as what systematic buy and sell decisions will be done as market fluctuations occur.

The BEST financial advisor provides each client with an Investment Policy Statement.

5. Will you receive a Personal Financial Policy Statement?

This is the plan that summarizes why you want your money to increase, what your goals and objectives are and shows you if you are on track to achieve those goals. It also provides you with documented criteria with which to assess the broker’s performance and service.

The BEST financial advisor provides you with an individualized Personal Financial Policy Statement.

6. Does he schedule meetings at specific time intervals and run them systematically?

Communication is the key to a great financial relationship. If you are always the first to initiate contact between you and your broker, then he is not being proactive. Legally, any advisor that charges you a fee must meet with you at least one time per year. And this meeting should be initiated by the advisor not necessarily you. The usual number of meetings per year is one, if they offer two, that is even better. If they offer 4 or more, they are probably not very busy or profitable. Any broker that is not profitable, should be avoided with a 10 foot pole. They may not be in business very long.

Does each meeting begin with an agenda, have well thought out discussion topics and follow through with requirements and action plans? The more well organized and systematized your broker, the more you can be confident he is running a professional, reputable financial management business.

The BEST financial advisor has frequent, well organized meetings and is strict about timing and schedules.

7. Does he have an account minimum or will he work with anyone who comes through his door?

Brokers that are successful, service oriented and committed to their clients will always have an account minimum. They have thought through how a profitable client relationship looks. They know how much time they will spend with a client throughout a year and realize that in order for them to be profitable only clients with certain account values can be accepted to begin a partnership. Your broker must run a profitable business in order to provide consistent service to you for years to come. Know your broker’s account minimums and make sure you are not too big or too small of a client based on their account minimum.

The BEST financial advisor sets account minimums.

8. Does he have a clean record?

Checking out his regulatory record is a must. The Financial Industry Regulatory Authority website is a great start (www.FINRA.org), as is the Securities and Exchange Commission website (www.sec.gov.) You can see if there has been any regulatory action against the financial advisor. You can also review the regulatory authorities which oversee any professional designation he uses after his name. In this case, the best news is no news.

The BEST financial advisor should have a clean regulatory record.

9. Does he have a business succession plan?

Many brokers build succession plans for their clients but still do not have one for their own business. If they do not, what happens if they leave the firm, get fired, get sick or even die? Are you left out in the cold? Having an organized plan is the sign of a committed financial professional. It also shows that he is truly conce
ed about your success no matter what happens to him.

The BEST financial advisor will always have a business succession plan.

10. Does he have any professional designations? For Example do they possess any of the following:

AIF Accredited Investment Fiduciary

CFP Certified Financial Planner

ChFC Chartered Financial Consultant

RIA Registered Investment Advisor

CHMC Chartered Mutual Fund Counselor

CIMA Certified Investment Management Analyst

CFA Chartered Financial Analyst

CPA Certified Public Accountant

JD Juris Doctor

EA Enrolled Agent

Keep in mind, designations are not easy to obtain. Most require some amount of Industry experience, several educational courses often followed by a final, cumulative exam and annual continuing education requirements. If your planner has attained these designations he has done a lot of work and has shown he is committed to this industry.

The BEST financial advisor always strives to be more astute in his field and professional designations prove it.

As you can see, it is extremely important to work with the BEST. But to find them in a very crowded industry, you must ask the right questions. Good luck on your quest to find excellence.

For more information on each topic above, read my book, Fire Your Broker, River Front Press. Available through www.boomer-living.com website. Discounted for Boomer-Living website visitors.

You may respond to Kelly in the “Leave a Comment” section below or email him at kcampbell@boomer-living.com or visit his website at www.Campbellwealth.com.