We’ve been with our financial planners for about seven years. One of the business partners died about a year ago, but we’ve stayed with the younger partner through the transition of the business. In the last six months we’ve been a little uneasy with some of the advice he’s suggested. How can we tell if our money guy has gone bad?
We believe the number one sign you are working with a poor financial adviser is when the adviser fails to focus on your needs. Your goals should drive your financial plan, and if your adviser neglects to plan for your goals in favor of fitting you into his strategy, you likely have a bad adviser. A bad adviser may also focus on one type of investment for every situation, regardless of your goals.
A bad adviser may also not tell you how they are paid. How the adviser is compensated should not be a secret. We also suggest making sure your adviser is a Registered Financial Adviser with the Securities and Exchange Commission. RIAs take on fiduciary responsibility where they are legally bound to put your interests before themselves or their firm. Other types of advisers may be good, but they are not held to the same standards as RIAs.
You should also be wary of an adviser who custodies assets in-house and those that do not provide legitimate monthly transactions statements or quarterly or annual reports. Generally, RIAs will not custody assets. A custodian, such as Schwab or Fidelity, holds the assets in your name. As a third-party, they generate their own statements to send you. Your adviser may provide you additional quarterly or annual reports to show your consolidated account information.
You may want to be concerned if your adviser moves you from asset to asset depending on the latest trend in the market. A good financial adviser will have a steadfast investment strategy they apply in all markets. You want an adviser who can clearly articulate the recommendations they are providing. You also want to understand your investments. At Henssler Financial, we are very straightforward in our investment recommendations: U.S. Treasury bonds, CDs, and common stocks that can be tracked and traded on the major markets. We also recommend exchange-traded funds and mutual funds in some instances. For more sophisticated investors, we have real estate investments, and if the situation warrants, we can provide access to annuity products. However, because of the nature of the annuity, we earn a commission on that product. That is clearly communicated to the client before purchase.
You should carefully review an adviser’s SEC Form ADV. This brochure provides a bulk of the information you should know about your adviser, including who runs the firm, how advisers are paid, any disciplinary problems the adviser has had and any conflicts of interest the adviser may have. This is essentially the “user’s manual” for an adviser.
At Henssler Financial we believe you should Live Ready, and that includes being comfortable with your financial adviser. If you have questions regarding your financial strategy, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at email@example.com.