Selecting Your Advisory Firm
Developing an effective financial plan is no easy task, and the process can often be quite complex. You deserve to have an advisor with the proper skills, knowledge and motivation to help you avoid common pitfalls and make prudent decisions. Below are some questions to consider when looking for a financial advisor.
Already have a financial advisor?
Compare Cassaday & Company, Inc. to your current advisor or other financial advisors you may be considering.
Ask yourself these questions to determine your need for planning advice:
1. How much help do you need? Total, partial or very little?
2. What kind of help do you need? Technical, executions, emotional, spiritual, handholding, discipline, etc.
3. What do you expect from your advisor? Proactive advice,
suggestions, recommendations, technical help, access to research, order entry?
Clients of Cassaday & Company receive comprehensive financial planning and full time investment management. Our objective is to take care of these important responsibilities for our clients. In addition to these services, our clients have come to rely on us for any issue they may have involving a dollar sign.
Understand your advisor’s financial interest in the relationship. It is of paramount importance to know:
- How they are compensated
- What are all the forms of compensation
- What are their incentives
An investment professional can help in many important ways:
- Establishment of an investment policy and a commitment to stick to it
- Design of your portfolio
- Selection of appropriate investments
- Implementation of your investment plan
- Coordination of your financial and estate affairs
- Reporting of your investment results
- Ongoing guidance and counsel
- Simplification of the investment process through consolidation and principled investing
Proper selection of your advisory firm can be relatively simple if you follow a few basic principles:
Avoid advisors who can only be compensated by a transaction fee. This is a conflict and may encourage the advisor to do transactions and not provide impartial advice. A fee-based arrangement usually alleviates these problems.
Avoid advisors who can only show an investor certain investments. Offering only captive or proprietary programs restricts the menu from which one’s portfolio’s investments can be selected. Also, these “captive” investments may carry incentives and could be recommended for the wrong reasons.
Select an advisor who has appropriate industry credentials. The CFP® designation is the most widely recognized of these. Although having this credential doesn’t assure financial success, it does let the investor know that the advisor has received specialized training and must undergo ongoing continuing education.
Experience is important. A minimum of five years as a practitioner should be an investor’s minimum requirement. Obviously, the more time as a practitioner, the better.
References. Ask the advisor how many clients they have. THEN ask to see a complete list of them. If they will allow you to choose references randomly from this list, it would indicate two important things:
- The advisor is confident about their client relationships
- The advisor has not “cherry picked” their references