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Financial Tips & Insights

5 Important Questions to Ask Any Financial Advisor

March 7, 2016

If you are like many investors, you are probably wondering if your current investment strategy will be enable you to retire on schedule and comfortably pay for your lifestyle after retirement.

 

Successful relationships between investors and financial advisers are built on trust and that trust is grounded in a commitment by the adviser to act solely in your best interests. How can you really be certain the individual you are entrusting not only embraces their commitment to you but is genuinely qualified to fulfill their obligation to serve you?

 

WHO IS A FIDUCIARY?

 

A fiduciary is any investment professional or financial adviser who is required by law and practice to act solely in the interest of and with undivided loyalty to their clients. A fiduciary's recommendations must align with your specific financial goals, time frame, risk tolerance levels, and cash flow needs. When managing your assets, a fiduciary must strive for a successful balance of risk and return. The Adviser must exercise care, skill, diligence, and objectivity in evaluating, recommending, and reviewing the traditional and/or alternative investment options. Any Adviser that you retain to manage your investments in a fiduciary capacity is a professionally obligated to ensure that:

  • Any and all recommendations and or services they provide reflect your specific financial goals, expected returns, time frame, and risk tolerance

  • Any and all assets within your investment portfolio are appropriately diversified among a range of securities, Exchange Traded Funds, mutual funds, or asset classes to attempt to effectively manage risk and volatility

  • Any and all assets activities, recommendations, and decisions are conducted in a thorough, objective and prudent manner

  • Your assets are held in a secure account by a qualified custodian, which could be a brokerage firm, bank, trust company, or insurance company

  • You receive statements at least quarterly, but ideally monthly, which will list updated values, transactions, interest and dividend payments for all positions in your account

Five Questions You Should Always Ask Any Adviser

  1. Will you always put my best interests above all others?

  2. Will you act with prudence: that is, with the skill care, diligence and good judgement of a professional?

  3. Will you provide full and fair disclosure of all important facts?

  4. Will you avoid conflicts of interest whenever possible?

  5. Will you fully disclose and mange, in my favor, unavoidable conflicts?

 

All Financial Advisers should be able to provide clear and concise answers to these five questions and be willing to disclose this information with you in writing. Make certain to inquire how their relationship with you will operate and list the resources and tools that are incorporated into their business practice.

 

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