What are the key factors in selecting an investment advisor?

When you are deciding to work with an investment advisor or financial planner, what should be the key factors?

Trust and connection:  Do you trust the advisor and firm? Do you feel a connection and bond with them, so both you and the advisor can be open and honest?

Investment philosophy: Do you understand the firm’s investment philosophy? Do they have a good track record? Do they have a “reproducible” methodology that is not based on market forecasting and guesswork?

Fee structure:  Does the firm have an easy to understand and transparent way of being compensated?

  • Is the fee structure designed so the advisor is only making recommendations with your best interest in mind?
  • We are fee only advisors. We do not accept commissions or other forms of compensation for the advice that we provide. We have a fiduciary duty to only act in our clients’ best interest.

Other factors:

  • Does the financial planning firm provide advice on other important matters in your life, beyond just investments?
  • Can they assist you to move forward with your estate planning? Do they provide creative ideas and work as a team with your estate planning attorney?
  • Will they provide advice with your retirement planning and college funding?
  • Are they comprehensive planners, so they can function like your family’s CFO?
  • Do they really help to minimize your taxes?

These are just some of the factors you should consider when retaining an investment advisor. The experience and credentials of the advisor and firm are also important.

Does it matter where the investments are held? Is that a key factor?

In real estate decisions, location matters. In insurance, if you talk to an Allstate Insurance agent, they are going to recommend Allstate Insurance for you. We are different. We make investment decisions based on what is in your best interest and consistent with our investment philosophy, not based on the custodian (where your assets are held). As long as the custodian of your assets is a well known and reputable firm, the actual “location” (custodian) should be a secondary factor.

As independent investment professionals, we have selected Fidelity Investments or Charles Schwab as the custodian of the assets that we manage. This is the place where your assets are securely held.

When a new client begins to work with us, we generally move their assets to one of these two custodians. We prefer Fidelity, as they provide our clients with the best combination of low costs, efficient service, easy to read monthly statements and a website that is secure and user friendly.

Think of the custodian as the holder of your assets. As we are independent advisors, we can recommend and purchase nearly any mutual fund, bond or CD that would be in your best interest. Because we recommend to custody your investments at Fidelity does not mean we recommend primarily Fidelity mutual funds. Far from it.

Our investment decisions are completely separate from the decision of where to custody (hold) your assets. Doesn’t that make sense?

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