Are you a registered investment advisor?
If the answer is no, then the financial advisor is a broker and is not required to act as a fiduciary. If the answer is yes, the advisor is required by law to be a fiduciary. This means the advisor must put your interests ahead of their own, by law.
Our Answer: Yes
Are you (or your firm) affiliated with a broker – dealer?
If the answer is yes, you are dealing with a financial advisor who can act as a broker and usually has an incentive to steer you to specific investments. One easy way to figure this out is to view the bottom of the advisor’s website or business card to see if there is a sentence like this: “Securities offered through (advisor’s company name), member FINRA/SIPC.” This refers to the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation, respectively. If you see these words, it means he/she can act as a broker. This means the advisor may not always put your interests ahead of his/her own.
Our Answer: No
Does your firm offer proprietary mutual funds or separately managed accounts?
The answer to this question can help you determine if the advisor is looking to generate additional revenues by steering you into these products that are highly profitable for them (but maybe not for you).
Our Answer: No
Do you are your firm receive any third-party compensation for recommending particular investments?
It might be important for you to know that your financial advisor has no incentives to recommend products that will shower him or her with commissions, kickbacks, awards trips, or other goodies that benefit the advisor, but don’t benefit you.
Our Answer: No
What’s your philosophy when it comes to investing?
This will help you to understand whether or not the advisor believes that he or she can beat the market by picking individual stocks or actively managed mutual funds. Over the long-term, that’s a losing game because the vast majority of money managers fail to beat the market (with the exception of a limited few).
Our Answer: We implement a passive investment philosophy using index funds, asset class funds, and ETFs. Download our firm investment advisory brochure here.
What financial planning services do you offer beyond investment strategy and portfolio management?
Investment help may be all you need, depending upon your stage of life. But as you grow older and/or you become more wealthy with various holdings to manage, things often become more complex financially. For example, you may need to deal with retirement income planning, savings for a child/grandchild’s college education, handling vested stock options, tax mitigation strategies or estate planning.
Our Answer: We provide comprehensive financial planning to every client who needs it. This means we advise you on all aspects of your wealth, not just your investments.
Where will my money be held?
A fiduciary financial advisor should always use a third-party custodian like Charles Schwab, TD Ameritrade, or Fidelity, to name a few. You then sign a limited power of attorney that gives the advisor the right to manage your money but never to make withdrawals unless it’s on your behalf. The great part of this arrangement is that if you ever want to fire your advisor, you don’t have to move your accounts. You can simply hire a new advisor who can take over managing your accounts without missing a beat.
Our Answer: We custody all client assets/accounts at Charles Schwab. We also have the ability to custody accounts at TD Ameritrade or Fidelity.
*Source of Questions Above: Tony Robbins, Unshakeable: Your Financial Freedom Playbook – Creating Peace of Mind in a World of Volatility, 2017. Finding the best financial advisor for you and your family can be difficult, especially if you don’t know what questions to ask. In Tony Robbins new book: Unshakeable, he outlines 7 key questions every investor should answer before hiring a financial advisor.
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