Marketplace Financial Advisor
Do You Need a Financial Advisor?
By Tracy Atwood, CFP®, RFC®
he world of investing is more complex today than before. In the past, asset allocation focused on three key asset classes: stocks, bonds and cash. That seems pretty simple, right? Well, these days with just domestic investing alone, stocks and bonds can be sliced and diced into several different asset classes. For example, stocks are categorized as either growth or value and then broken down by size (large, medium or small), all of which can perform differently in certain economic environments. Throw in foreign markets, commodities, precious metals and alternative investing, just to name a few popular headliners, and the investment environment becomes very complicated. So do you need an advisor? In today’s world an advisor is more important than ever, especially when it comes to planning for retirement years. Some may argue that in the “Information Age” access to so much more data means one can make good decisions alone with a little research. I think the opposite. There is too much information out there. It is information overload, even to somebody who has been in the industry 20+ years. The amount of information and conflicting opinions is daunting, to say the least. Between market changes, hundreds of thousands of product offerings to pick from, changes in laws and conflicting media and advertising… what do you do? You seek advice from an advisor who dedicates their career to evaluating these things every day. Whether you are looking for an advisor or want to make an advisor change, keep these key questions in mind: What are the advisor’s credentials? Credentials to look for are the CFP® (Certified Financial Planner), ChFC (Chartered Financial Consultant), PFS (Accredited Personal Financial Specialist), and RFC® (Registered Financial Consultant). Does the advisor work with other people you know personally? Ask your friends and colleagues who they work with and ask if they would recommend them. Also, other professionals you work with, such as attorneys and CPAs, will often refer to people based on shared client experiences. How is the advisor compensated? Commission-driven or fee-only? Many times commissiondriven brokers are more concerned about their next commission or transaction versus servicing their existing clients. With a fee-only advisor, typically the longer they keep you happy as a client and the better the performance of the account, the more they are compensated. In other words, the client and advisor goals are aligned. What is the advisor’s background and experience? Investment philosophy? Average portfolio size managed for a typical client? How many clients does the advisor have? What are the total assets under management? Do you like the advisor? This is perhaps the most important and often-overlooked question. Do you have an easy rapport and do they seem genuinely interested in you? Don’t feel pressured to make a decision. Just as with a doctor recommending major surgery, it never hurts to get a second opinion before investing. For a free, detailed Consumer’s Guide to Selecting a Financial Advisor and the 13 questions you should ask, contact Retirement Investment Advisors at 842.3443. Tracy Atwood is a financial advisor with Retirement Investment Advisors, which has been recognized 29 times in national publications as one of the top fee-only investment advisory firms in the nation.
This article appeared in Southwestern Publishing’s June 2009 issues. It is reproduced with permission. © 2009 Southwestern Publishing