How to Work with an Investment Advisor

When it comes to working with an investment advisor, the value you receive is based in the quality of the relationship you establish and his or her ability to meet, or even exceed, your expectations. Most clients don’t mind paying a fee for investment advice, and many don’t expect their advisors to perform superhuman feats with their portfolios; however, they do expect their advisors to fulfill their commitment to providing superior service that includes frequent communications, transparency, and conflict-free guidance. In order to get the most value from your investment advisor, you need to first articulate your expectations and get agreement on how the two of you will work together.

The best investment advisors will offer the opportunity, to interview them and assess their background, experience and philosophy. But first, you must be clear on what you expect, then ask the right questions:

• Are you looking for objective advice? Then you need to ask, “Do you have the ability to shop the market for the lowest cost options or are you limited to certain options?
• Are you looking for investment advice based on sound principles and practices? Then you need to ask, “Under what principles is your investment advice formulated? Is it grounded in sound theory or your own frame of reference?
• Do you want complete transparency in your transactions with your advisor? Then you need to ask, “Who receives compensation for my investment purchase and how is it determined and disclosed?
• Do you want to know with certainty that your interests will be served above all others? Then you need to ask, “Do you operate under a fiduciary standard of care?” “Is that in writing?”
• Do you want the highest degree of responsiveness and timely communication? Then you need to ask, “What are your specific methods and frequency of communications, portfolio reporting, client contact, and client reviews?” “How quickly will my calls be returned, and will they be returned by you or a staff person?
• Do you want to know that you will have access to a broad range of expertise and resources in addressing your needs? Then you need to ask, “Do you have access to a team of experts from all of the financial disciplines – taxation, estate, business, insurance, etc. – and how do you interact with other advisors?”
• Do you want to know that your advisor has the high level of competency and stays current in the various fields in which he practices? Then you need to ask him about his educational and profession background as well as his continuing education? Ask for a resume of educational and professional credentials and achievements.

You may quickly come to realize that many investment advisors will not be able to pass under this type of scrutiny, which is all the more reason to ask these and other penetrating questions. Setting the tone for a working relationship with an investment advisor is a critical first step in your investment management strategy, so ask away.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2022 Advisor Websites.