an Investment Advisor
you find yourself in a chronically
leaking boat, energy devoted to changing
vessels is likely to be more productive
than energy devoted to patching leaks.”
a manager who is independent, consistent, communicates well, measures success by clients' performance,
listens first, teaches rather than tells, has low fees, and with whom you are
Registered Investment Advisor with the obligation
to put their
clients' interests ahead of their own.
that are independent
of investment company products and pressures.
consistent investment philosophy
which provides long term performance.
styles that fosters understanding of clients' unique objectives and
that measures success by his clients'
fee-only advisor that
minimizes costs and taxes.
investments in which you feel secure.
who candidly discusses results during
up and down markets.
with who you are comfortable enough to confide
your hopes (objectives) and fears (risk
mistakes in selecting investment managers and advisors:
Referrals: The best method to identify potential advisors is through referrals. However, most people don't know how to
evaluate their own manager.
Is he or she
rich: Successful advisors get rich from
the power of compounding, not from client fees. While being "poor" should be a disqualifier, having a rich advisor doesn’t mean you’ll end up that way too.
Large amount of assets under
management: The amount of money under management often hinders performance.
for a large brokerage, bank or investment company: Brokerages, banks and investment companies
put their business first (generating profitable returns) and the profession second (meeting client
check your advisor’s history.
Has other clients in your economic
bracket: Managers and advisors that specialize in a certain economic bracket often develop a
one size fits all solution.
Has a large number of
clients: A large number of clients may inhibit the advisors
ability to respond to (new or smaller) client needs.
Use an accountant or
lawyer: Accounts and lawyers will not have the
knowledge, time and commitment to advise clients about their investments (most successful ones use an investment manager themselves).
stockbroker: A stockbroker, by law, only has to make sure his recommendations are
suitable for his clients and
must put his company's interests ahead of
his client's. An advisor has the fiduciary responsibility to put this clients’ interests ahead of his own, a much higher
standard that aligns with client interests.
Use a certified financial
planner: Certified financial planners have neither the time or expertise to be proficient in all aspects of your financial life (investments, insurance, estate planning, etc.). They should
oversee your entire financial
program, participating with you as your interact with
your advisor to insure your objectives are understood, and help you evaluate the results to insure you are on track to achieving them.
that can indicate if you need an advisor
or asset manager; or need to make a change from your current
How do you respond to under-performing the market for a week, a month, a quarter, a year or 3 years?
How did you handle the 2000 to 2003 market downturn? Have you participated in the market sufficiently since 2003?
Does market volatility
keep you up at night, make you delay financial decisions, or make you spend inordinate time 'watching' your portfolio?
Do you trade in and out of securities often and at the wrong times?