By: Paul A. Werlin, President, Human Capital Resources, Inc.
In my last article, one of the topics I discussed was a study that showed the actual dollar value of a professional Financial Advisor (FA). There really is no debating the fact that professional guidance can help anyone achieve better returns on their investments.
As a “Client,” you have a right to expect more than just higher returns compared to DIY investing. So, here’s a list of the things you have a right to expect from a Financial Advisor.
First, an FA needs to really listen to you and so understand your goals, concerns, and unique circumstances. Only with the knowledge they gain from listening and then developing a game-plan specifically for you, can they really add value. One size really does not fit all. One of the most important parts of an FAs job is to ask questions and listen.
Communicate with you on a regular basis and be accessible. The old cliché is too often true: an FA only calls you when they want to sell you something. In fact, many surveys of Clients found that the number one reason people leave their Advisors is that they never hear from them. Your FA should keep in contact with you; keeping you informed, letting you know how your investments are doing, and any updates on economic news that could influence your portfolio. FA communications should be proactive, and responsive to your calls in a timely manner.
Help educate you. Investing, interest rates, world economics, taxes and so much more. Making sound decisions about your money has never been more difficult. FAs have a responsibility to explain the costs, features benefits and risks of every investment you hold and any recommendations they make. And, just as importantly, if you don’t understand an investment or investment strategy—ask!
Clearly explain all fees and charges. Every FA has a right to earn a living and charge for their services. And the investment products you purchase probably have their own fees and charges too. Your FA needs to take the time to explain these fees, changes, or commissions- how they effect your investment returns and how they are compensated.
Help build reasonable expectations. Want a “safe” investment that pays 20% annual returns? Expect your Social Security benefits alone to allow you a “comfortable” retirement? Maybe not. Your FA should help you have attainable goals and keep you from make mistakes base on unrealistic expectations.
Not “push” products. This one is obvious. Making recommendations for products and services that will help you achieve your financial goals isn’t selling or product pushing. If you need a car, a salesperson should help you pick the one that best meets your needs for mileage, hauling capacity, comfort, price, etc.
Keep you on track towards your goals. There are always bumps along the road. You may have unexpected expenses, loose a job, or get divorced. It’s impossible to tell what the future may have in store. But an FA can help you make adjustments, modifications or major changes based on your circumstances. Everyone needs a plan, but every plan needs to be flexible and adaptable to change. An FA has the knowledge to make changes as necessary and ultimately, to keep you moving towards your goals.
Fair costs for services provided. FAs need to make a living. There are no free lunches and FAs are entitled to a fair fee for their services. FAs may make commissions on product sales or a percentage of your assets they manage. In either case, make sure you understand how your FA is compensated, and if you’re not sure, just ask. A good FA is open about their compensation and is not ashamed or embarrassed by what they make.
Always remember that you, and not your FA, is in charge. It’s the FA's job to keep you informed, follow your investment plan, and make sure you’re happy with their services. If you’re not, express your concerns and hopefully your FA will listen and make appropriate changes. FAs work for you and you have the power to replace them.
Ready to improve the quality of your financial life? Harry is the host of a new podcast from the FinancialVerse where he shares practical ways to relieve money stress and anxiety. Each 7 to 10-minute episode is designed to fit into your busy lifestyle. Subscribe today or just ask Alexa or Siri to play the FinancialVerse podcast.