We the investors of the world have provided the funds that corporate America has needed to finance their growth over the past two hundred dollars years in turn for the right to share in that growth and profits previously only afforded owners. The investor/ management relationship spent some time working out so well that a whole industry evolved to meet the growing number of investors needs for information and advise to assist investors in making sound investment decisions. The Financial Services Industry, which originally was only available to the very wealthy, continues to grow over the decades to be the provider of investment information to roughly 40% of American families.
Most financial advisors are affiliated with large investment firms that direct the firm’s collective knowledge, information and expertise to their cadre of counsellor to give to individual and institutional investors. The theory is that this gave those investors associated with large firms potential for returns that could not be achieved on their own or with an association with smaller or independent counsellor.
Thus the Financial Counsellor that advised you and me was actually taking the firms “expert knowledge”, having it to our sanitation and advising us where we should be investing our savings to achieve our financial goals. We were told that since 1900 if you stayed dedicated to a well diversified account you would do not have less when you started in any ten year period.
So what happened over the past decade? Most of us lost a considerable part of our savings in the 2001 Tech Bubble in order to loose more individuals savings in the Sub-contract Prime Bubble. The $100, 000 that we had in Jan 2001 shrank to $60, 000 by November 2003 then grew to $80, 000 in June 2007 and is now worth $40, 000 today. We’re eight years closer to retirement and wondering how we’re going to survive if we ever do get to leave the workplace.
Do we just plan on doing work for the rest individuals life? Do we work until we can’t then go in Medicaid and survival turn into a depletion on the united states economy? Do we take what offering left and produce a strategy and lifestyle that will allow us to live out a comfortable life without being a weight on or children and our country?
Exercise think the last option is the best option, but it is going to take an adjustment in our perceptions and lifestyle. One of the adjustments has to be in how we look at the investment markets and out financial advisors. Whether you should change Financial Advisors or not, now is the time to asses the performance of your current counsellor and decide if it is time to produce a change. I am these are a Financial Counsellor not an Investment Counsellor, there are less then 5% of the world’s population that ought to be seeking the services of an Investment Counsellor. The investment markets are not a place for most people to Model Portfolios for Advisors turn to make money; they are a place for us to preserve the main city that we have gone and grow that capital at reasonable rates of return.
The first step in choosing your new Financial Counsellor is for you to decide what you want from your counsellor after your attitude adjustment. Here are some of my suggestions:
a Help me preserve the main city I have left and grow it at a conservative rate of return.
a Help me to live within my means and set an investment strategy based on my needs and goals.
a Help me protect his dad form loosing my earning ability or my death.
a Help me and his dad achieve our financial goals prior to retirement.
a Help me accumulate enough to enjoy a comfortable retirement.
a Help me assess my need for long term care insurance.
a Help me establish and real estate plan.
Once you know what you want from your counsellor you’ll need to find a qualified provider. Such as all professions the first diploma you need to look for is education. Your potential advisors will have a string 66 or a Series 7 securities permission as well as an insurance permission and a variable products permission. A string 66 allows them to sell mutual funds and a Series 7 allows then to sell stocks, bonds, options as well as mutual funds. A string 7 is a more in-depth course of study then the Series 66, so I’d eliminate anyone who doesn’t have a string 7 securities permission.
Seventy percent of the people that represent themselves as Financial Advisors stop their education beyond their entitlements and their required annual continuing education. It’s the other 30% of the advisors that you are looking for. These are the people with initials behind their names that represent professional designations. At the top of this designation pecking order is the CFP (Chartered Financial Advisor) designation. A CFP is comparable to a master’s degree in financial planning; it takes 36 months of study and at least 36 months of practical experience. To find a CFP in your community go to: cfp. net/search. Other designations like the ChFC (Chartered Financial Consultant) and CLU (Chartered Life Underwriter) are focused on specific clips of the financial advisory field. These designations are like Board Accreditations in the medical fields, and Exercise would not put my finances in the hands of anyone who doesn’t take their profession seriously enough to research all the education that is available. This search can leave you with a list of three to three depending on the size of your community. I suggest that you check BestofUS. com a website that lists the best of ten professions across the united states. This should help you bring your list down to a manageable number of qualified advisors.
Next go to the NASD (National Association of Securities Dealers) website and look up your short list of qualified advisors. (finra. org/Investors/ToolsCalculators/BrokerCheck/index. htm) Here you’ll be able find out your potential advisors work history, permission history and if they have had any legal or disciplinary action brought against them. We’ve been through some pretty tough financial times over the past several years and much of good advisors have been sued, so utilize this information as a method of asking your potential advisors some tough questions. “Can you tell me what these issues are about? inches Now Google your short list and see what you find; you’ll be surprised what you’ll learn.
At this point, you need to sit down with those left on your short list. Here is a list of questions that you should ask.
a What is your approach to financial planning? If they don’t address the “Help me” points above their not a Financial Counsellor. If they start talking about Managed Accounts, Sector Investing, Momentum, Technical verse Fundamentals, or Option Strategies your talking to and Investment Counsellor.
a What was your book of business worth on Goal 1, ’08 and what is your book of business worth today? Can i see supporting reports? Their going to ask to see your financial plans, it’s fair for you to ask to see theirs and if it’s down more then 25% you’re in the wrong place.
a How are you paid? There are only three possible answers here; commissions, asset base compensation, or fees. Most will be a combination of the three possibilities; one that you want to consider is commissions. Commissions can create a conflict of interest. Asset based compensation means as your assets grow their compensation grows or as your assets go down so does their compensation. I liked that it results in a common objective. Fees will involve special work like a financial plan or a research project relative to your unique situation, which is fair.
a How often will we meet to review my situation? This needs to be at least twice a year.
a Tell me about yourself. How long have your been in the business? Do your have any professional designations? Have you had any legal or disciplinary action taken against you? What is your employment and education background? Have you written any books or articles i always can read? You know all the answers, just rest and judge.
If you’ll follow this process you’ll find the best Financial Planner for you. You may end up with the person that you’ve been using, but you now know they are qualified to provide you with the service that you need from your new Financial Counsellor.
Choosing your best Financial Counsellor is really as important as choosing your best Physician, so do your homework and then take responsibility for your decision. As is managing your health you have to take an active role in the management of your finances; stay involved and understand everything.