Is your financial advisor a fiduciary or disguised as one but really hoping to sell you a product? The article in the Inquirer by Erin Arvedlund offers a nice explanation of the differences and gives a nice plug to NAPFA, an organization we have been part of since our founding over sixteen years ago. If you need help figuring out who to hire to help you make smart decisions with your money, check out the nice list of questions to ask that will help get you pointed in the right direction. Good luck and if we can help you figure any of this out, we would love to hear from you.
Ways to find out if your adviser is on your side
ERIN ARVEDLUND @erinarvedlund
Philadelphia Inquirer – Philly Edition eEdition
>Do you have a minimum fee? If so, what is it?
>What percentage of your firm’s commissions comes from sales of insurance, annuities, mutual funds, stocks and bonds, and other assets? Does any member of the firm participate in, or receive compensation from, investments you may recommend to me?
>Do you receive referral fees from attorneys, accountants, insurance professionals, mortgage brokers, or others?
>Do you receive ongoing income from any funds that you recommend in the form of 12b-1 fees (marketing or distribution fees on mutual funds), trailing commissions, or other continuing payouts? Are there financial incentives for you to recommend certain financial products?
>Do you offer advice on goal setting, cash management and budgeting, tax planning, and regular investment reviews? Do you offer estate planning and education-funding ideas?
>Will you provide a comprehensive written analysis of my financial situation and recommendations?
>Does your financial-planning service include recommendations for specific investments or investment products? Do you offer continuous, ongoing advice regarding my financial affairs, including advice on non-investment financial issues?
>Will you take custody of, or have access to my assets? (The answer should generally be no. You should always have an independent third party sending you the investor copies of your statements, from the firm where your assets are held.)
>How long have you been a financial planner? Do you have clients and references willing to speak with me about your services?
>Have you ever been cited by a professional or regulatory governing body for disciplinary reasons?
>Are you currently engaged in any other business, either as a partner, officer, employee, trustee, agent, or otherwise?
>Will you or an associate of yours work with me?
>Will you sign a Fiduciary Oath?
>Do you have an agreement describing your compensation and the services that will be provided in advance?
>If you were to provide me ongoing investment-advisory services, do you require discretionary trading authority over my investment account?
