Does your financial advisor invest as they recommend?

Have you asked your financial advisor whether they invest in the same investments which they recommend to you?

You should ask this question.

Depending on your broker or financial advisor, you may be surprised by the answer.

If you are a client of our firm, the answer is a clear yes. The partners of the firm invest their assets in the same stock mutual funds as we recommend to you. And relatives of the partners are invested in the same manner as well.

If you are not a client of our firm, or have an account with a major brokerage firm or bank, the answer from those brokers and advisors will likely be very different. If your advisor is investing differently than their recommendations, that should concern you. It should lead to more questions. Maybe that should lead to a conversation with us.

We feel this is a really important distinction. Our investments and interests are aligned to be identical to yours. We have the same skin in the game as you do. If you are making money, we are making money. If your accounts are going down, our accounts are going down.

I learned many years ago, prior to forming our investment advisory firm, that this was not always the case. In various conversations, I realized that brokers were making recommendations but not investing their own money consistent with their client recommendations. I asked this question. When meeting with brokers who managed my prior firm’s profit sharing plan, I was very surprised to learn that the brokers, who were close in age to myself, did not themselves own the investments they were recommending to our firm. This made no sense to me. This was a defining lesson for me.

I was reminded of this inconsistency while listening to a podcast** which featured a colleague of mine whose firm also works with our back office firm, BAM Advisor Services. Tim Delaney explained that prior to starting his financial advisory firm, he and his father had both experienced situations where they made investments in real estate and other deals, which turned out to be big losers. Tim later found out that the advisors who made the recommendations had not invested their money into these same investments.

These other brokers were selling investments and selling products. They were not following their own advice. We do not sell. We provide advice and recommendations, which we follow ourselves.

Investing our money alongside our clients is one of the guiding principles we have had since the inception of our firm. The exact allocation of the mutual funds I own may be different than yours, based on each person’s specific situation. But if you own a US small value fund we recommended, I own the same one. If you own an International Large Value fund, I own the same one. You get the picture. The same goes for Keith, my partner, as well as each of our parents.

This is another reason that you should be confident and comfortable with our firm and our principles. Your financial future is based on our recommendations and financial advice.

Our financial future is dependent on the same investments.

Shouldn’t it be this way?


**Financial Advisor Success Podcast, by Michael Kitces. Number 25, with Tim Delaney. These podcasts are primarily for financial advisors. This podcast provides a background similar to our firm, as it discusses how Tim transitioned from a full-time CPA to a financial advisor and his relationship with our mutual back office firm, BAM Advisor Services. Tim and I have been in a peer learning group for over 10 years and we talk on a regular basis.



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