The objective of this book is to make you an informed investor. We have attempted to provide you with the information necessary to design and implement a prudent investment plan giving you the best chance of achieving your goals. There are investors who recognize they have neither the knowledge nor the discipline required to be successful on their own. They also recognize that a good financial adviser can add value in many ways. Other individuals would rather have someone else focus on financial matters so that they can focus more of their attention on important things in their lives: family, friends, community service, or hobbies. We offer the following advice for those thinking of employing a financial adviser.
When interviewing a financial advisory firm, have its representatives make the following twelve commitments to you. Doing so will give you the greatest chance of avoiding conflicts of interest and the greatest chance of achieving your financial goals.
The firm's guiding principle is that the advice provided will always be in your best interest.
The firm will provide a fiduciary standard of care: the highest legal duty one party can have to another.
The firm is a fee-only adviser, avoiding conflicts that commission-based compensation can create.
The firm fully discloses potential conflicts.
The advice is based on the latest academic research, not on opinions.
The firm is client centered: It doesn't sell products, only advice.
The firm provides a high level of personal attention: Each client is assigned a team of professionals with which they will develop strong personal relationships.
The firm's employees invest their personal assets, including their profit-sharing plan, based on the same set of investment principles and in the same or comparable securities they recommend.
The firm develops an investment plan that is integrated into estate, tax, and risk management (insurance) plans and tailored to your unique situation.
The firm meets with clients on a regular basis to review their plans and determine whether anything significant has changed that would cause the underlying assumptions upon which the plan was built to change. If there have been changes, the firm will adapt the plan to the new circumstances.
The firm's advice is always goal oriented, evaluating each decision not in isolation, but in terms of its impact on the likelihood of success of the overall plan.
The firm's comprehensive wealth management services are provided by individuals with CFA, CFP, PFS, or other comparable designations.
Good advice doesn't have to be expensive. However, bad or untrustworthy advice almost always costs dearly, no matter how little you pay for it. Perform a thorough due diligence before choosing a financial advisory firm. That due diligence should include both the twelve commitments and a careful review of form ADV, a disclosure document setting forth information about the adviser, including investment strategy, fee schedules, conflicts of interest, and regulatory incidents.