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Is It Time To Find A New Financial Advisor?

Your advisor promised to help you meet your financial goals. In the beginning of your relationship, the phone calls and meetings were frequent, but in the past couple of years as the market and your portfolio decreased, you haven’t heard from your advisor. Maybe, you gave them instructions to sell certain investments and they have refused to or else forget to do so. Now, perhaps the only time they contact you is when they are trying to sell you a product. Are you tired of conflicts of interest your advisor and/or his or her firm has when providing you with advice? Do you enjoy hearing that your brokerage firm recommended stocks that they underwrote that were extremely overrated or now the brokerage firm’s executives were taking kickbacks or making preferential deals for their executives and for their better clients?

Incompetence is also a disease that affects one’s net worth. If your stockbroker or advisor is from a brokerage firm or a bank, have they recommended only their firm’s mutual funds (a large conflict of interest)? Perhaps a few years ago they recommended very expensive growth type stocks and kept telling you to hold on as the market continued to drop (a sign that they don’t understand investing fundamentals). Do they explain to you in detail investing issues such as asset class and market valuations, what interest rates are doing and what legendary investors such as Warren Buffett and Bill Gross are saying? Or are they just saying buy and hold. If the later is true without mention of the former, then it is probably the sign of an unsophisticated advisor. The same would be true of someone whose only answer is to place your money with a money manager, also known as a private manager or separate account managers.

Let’s discuss performance for a moment as well. If your portfolio dropped 20% or more from the beginning of 2000 to the end of 2003, you had a poorly constructed portfolio. While most advisors lost some monies, a loss exceeding 20% was excessive.

Advisors who recommend mutual funds from only one mutual fund family or sells only variable annuities, lack sophistication. No single mutual fund family or annuity can provide all the solutions. Most fund families are not good at everything. Even the larger more well known names, specialize in certain types of funds.

Even worse than incompetence or limited product offerings, are advisors who are out for the quick kill when it comes to their compensation. They only recommend products that are highly commissionable.

Here are examples of sure signs an advisor is mostly product sales focused:

  1. They recommend only insurance products or have recommended buying annuities inside IRAs and other retirement plan accounts.
  2. Their recommended products have back-end surrender charges.
  3. A, B, C or D share mutual funds are the only ones being recommended.

Any of the reasons mentioned in this article are good ones for finding a new advisor. The best solution is to find a financial advisor who is competent and trustworthy, one on whom you can depend for professional advice and who is eager to have frequent contact with you.

Next month: How To Find A Great Financial Advisor!

There are numerous ways to evaluate an advisor. Make a list of the criteria you require in an advisor. The criteria can include; professional investment and financial planning experience, investment performance, compensation structure, credentials, frequency of contact and willingness to develop a long-term fulfilling relationship for both parties. Furthermore, does your advisor have investment research capabilities, using such computer software programs as Bloomberg and Morningstar to analyze private equities and mutual funds?

Evaluate your advisor by asking yourself the following questions. Does your advisor contact you less than monthly? Does it take more than 24 to 48 hours to return your phone call? Is your advisor employed at a full service brokerage firm (In other words they are fraught with conflicts of interest)? Is your advisor a bank that primarily recommends its own products and lacks imagination (by recommending only large U.S. stocks and/or bonds) when it comes to managing your portfolio? Does your advisor provide investment tax planning as well as the cost basis on your securities in addition to the investment gains and losses to report on your income tax return as a routine part of their service?

Furthermore, does your advisor provide you with comprehensive financial planning services, such as income tax planning and projections, education funding planning, retirement planning, survivor planning, employee stock option analysis, estate plan document reviews and if applicable, philanthropic guidance. Does your advisor perform analysis of all your property and casualty (auto, homeowners and umbrella liability) insurance? If the answer to most or all of these questions is no, then you need to rethink your relationship and begin searching for a new financial advisor.

For further information, contact Diane M. Pearson, CFP™ at (412) 635-9210 or e-mail her at legend@legend-financial.com.



INDEX
  • How To Spell Estate Tax Relief
  • One Last Shot At A Tax Exemption
  • 5 Ways That Can Help You Pay For Higher Education
  • Seven Smart Money Moves You Should Make In 2017
  • Sticking With The Fundamentals
  • 17 Midyear Tax Moves You Still Can Make In '17
  • A Quick Overview Of Preferred Securities
  • Weigh Five 401(k) Options When Leaving A Job
  • Locate A Tax Shelter Near A School
  • How To Improve Chances For College Financial Aid
  • What Would You Do For A Bigger Salary Or More Benefits?
  • 7 Late Moves To Cut Taxes This Year
  • Seven Good Reasons To Create And Fund A Trust
  • A Good Time To Remember How Long-Term Investors Must Think
  • Remember The Lesson Of Rebalancing
  • Section 529 Plans Keep Getting Better And Better
  • Three Ways You Can Play Good Stock Market Defense
  • When Can You Reconvert To A Roth?
  • 8 Compelling Tax Reasons For Roth IRA Conversion
  • Steer Clear Of These 7 Traps For IRA Owners
  • Make Sure That You Comply With All The RMD Rules
  • How A Financial Advisor Can Help
  • Rising Housing Prices May Be Sign That New Bubble Is Forming
  • After Five Great Years For Stocks, What's Next?
  • What Are Latest Trends In Prenups?
  • The Three Biggest Financial Mistakes That You Can Make
  • 4 Of The Main Reasons To Keep Your Bypass Trust
  • Seven Steps After A Spouse's Sudden Death
  • 7 Expired Tax Breaks That Were Given A Longer Life
  • Will Record Profit Margins Upend The Bull Market?
  • 14 Top Year-End Tax Moves For Individuals In 2014
  • Be An Elephant And Downplay Talk Of Bulls And Bears
  • Five Financial Vows For Newlyweds
  • Will Record Profit Margins Cause Stock Prices To Plunge?
  • Ins And Outs Of Nondeductible IRAs
  • Identifying Investment Risk And Coping With It
  • How Best To Leave IRAs To Your Grandchildren
  • 4 Tips For Assembling A College Savings Plan
  • Don't Be Shocked If Your Tax Deductions Are Slashed
  • 2013 Was A Poor Year For Diversification
  • Risk Rose Slightly In January, But Has Decreased In February
  • Expenses And Behavior Are Key To Investment Success
  • Five-Year Returns Show Why Diversification Is Key
  • Where Can You Invest For Safety?
  • Perspective On Stock Market Trends
  • Find Extra Benefits In DI Insurance
  • Crash Course On Paying For College
  • A Realistic Look At A Hot Topic: Dividend Stocks
  • Don't Ignore These Tips About TIPS
  • Investors Flee Stocks At Precisely The Wrong Time
  • Take A Closer Look At Your RMDs
  • 10 Reasons For The IRS To Flag Your Return
  • Economic Growth Set To Slow Down Around The Globe
  • Where Will You Live After You Retire?
  • Muni Bonds May Show Gains As Tax Increases Approach
  • Two Investment Principles In Tandem
  • Is It Finally Time To Refinance?
  • Do You Understand Investments?
  • The Best Way To Gauge If The Market Is Overvalued
  • Should You Take Social Security Early Or Late?
  • Identity Theft In The New Year
  • Preserving Assets For Generations To Come
  • Managed Futures Mutual Fund Update
  • Give Away Gifts With No Gift Tax
  • Saving For Retirement
  • 21 Shocking But True Statistics About Retirement
  • Why You Shouldn't Do Your Own Estate Planning
  • Take The Time To Give Lifetime Gifts
  • What Does The Downgrade Of U.S. Debt Really Mean?
  • Should You Give Gift Cards? They May Not Be Used
  • What Do You Want Your Legacy To Be?
  • Breaking Up Doesn't Have To Be Hard
  • Do You Have An Administrative Trustee?
  • Will The New Financial Reform Law Benefit You?
  • Roth Conversion Can Hurt College Aid
  • Do Second-To-Die Policies Merit A Second Chance?
  • It's NOT The Economy, Stupid!
  • Biggest Estate Tax Problem? Income Tax
  • The Ins And Outs Of Lifetime Gifting
  • What To Do If Your College Savings Plan Is Battered
  • Identifying And Fixing The Global Economy's Woes
  • Uncle Sam Changes Financial Aid Rules
  • Retirees Eligible For Many Tax Cuts In Recovery Act
  • Funding College Savings Plans For A Grandchild
  • An Update On College Savings Plans
  • Five Smart IRA Ideas For Pre-Retirees
  • Does Your 529 College Savings Plan Match Up?
  • A Reverse Mortgage For Mom And Dad
  • Tax Pros And Cons Of Municipal Bonds
  • How The Bankruptcy Law Affects Wealthy Individuals
  • Limits of Family Limited Partnerships
  • They Don't Call 'Em Trusts For Nothing
  • The Roth 401(k) - Is It Right For You?
  • Planning Ahead A Couple Of Generations
  • Use FLPs To Transfer Assets And Cut Estate Taxes
  • What You Need To Know About The AMT In 2008
  • Coping With Estate Tax Uncertainties
  • Thinking of Remarrying? Think Prenup
  • Many Americans Fail To Take Care Of Financial Basics
  • Beware Of Social Security Identity Theft
  • Regulatory Guidelines Update
  • Energy Systems Scale and Timeline
  • Free Credit Reports Available Online
  • Don't Forget About Roth 401(k)
  • The Oil Patch Profit Squeeze
  • Understanding the Importance of a Fiduciary Standard
  • Timber As A Liquid Investment
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • Ethanol: Salvation or Panacea?
  • Timber Facts
  • Bank Loan Funds - A Primer
  • The Dangers of Medical Identity Fraud
  • A Primer On Managed Futures
  • REITS: A Very Good Portfolio Diversifier, But Should You Invest In Them?
  • Does Investing Internationally Still Diversify Your Portfolio?
  • Another Way To View The Current Valuation Of REIT Sector
  • Understanding Risk-Preparing For The Unseen
  • Why Not Alternative Fixed Income Investments?
  • How Dangerous Is A Dollar Crash?
  • What Is Shorting Expense?
  • How Volatile Can The Stock Market Be?
  • GMO 7-Year Asset Class Return Forecast Is Bleak
  • Too Many ''Phish'' In The Sea
  • The Case For Industrial Metals
  • Ways To Improve The Score
  • Know The Score
  • Total Credit Market Debt (All Sectors) As % Of U.S. GDP
  • To Reinvest Or Not To Reinvest
  • Just How Expensive Is The Market?
  • Beware of Brokerage Firms' Misconduct
  • Identity Theft : Correct Those Credit Reporting Errors
  • Risk-Controlled Investing
  • What Do Rising Interest Rates Mean For Money Market Yields?
  • Q & A With Robert Arnott
  • Identity Theft : Applying For Credit? Better Check Your Credit Report First
  • Identity Theft: Everyday Prevention
  • Identity Theft: Help Is On Its Way
  • Identity Theft: Tips to Protect Yourself
  • Identity Theft: A Note About Social Security Numbers
  • Identity Theft: What Documents Should You Shred Or Store?
  • Identity Theft : Don't Fall For That E-Mail!
  • Identity Theft : One More Reason To Protect Your Credit
  • Section 529 Plans Are Popular But Not The Only Way To Go
  • Exit Gracefully: How Business Owners Should Plan For A Comfortable Retirement
  • The Importance Of Commodities In A Portfolio
  • A Tale Of Two Hedges
  • What Is Risk?
  • How To Find A Great Financial Advisor?
  • Is It Time To Find A New Financial Advisor?
  • 4 Steps To A More Secure Investment Portfolio For Your Retirement
  • Traditional Investing May Decrease Your Retirement Lifestyle
  • Year-End Tax Planning Can Help Generate High Return On Investment
  • Is Your 401(k) Plan A Failure?
  • Understanding Deflation
  • Tax Issues To Consider When Buying A Long-Term-Care Policy
  • Evaluating The Quality Of A Company's Earnings
  • Investing In Times Of Uncertainty And Risk: The Importance Of Diversification
  • 2001 Tax Relief Act Changes Education Planning
  • Yesterday's Great Companies
  • A Retirement Plan Primer After The 2001 Tax Act
  • Beware Of Common Home Repair Scams
  • Custodial Accounts: One Way To Make Gifts To Children
  • Estate Taxes To Be Reduced Then Repealed In 2010
  • Faulty IRA Conversions Can Lead To Tax Penalties
  • Many Individuals Pay Private Mortgage Insurance Beyond When It Is Necessary
  • Rethinking Estate Planning
  • Retirement Plan Contribution Limit Changes
  • Shopping For A Bank Account That Pays The Highest Possible Rate Of Interest
  • Early Retirement Incentives For Tenured Faculty Waives Fica Tax Payment
  • Do It Yourself Tax Preparers Watch Out: Tax Answers From IRS Centers Oftentimes Are Incorrect And/Or Insufficient
  • Your Medical File Report May Need A Check-Up
  • Five Tips For Preventing Thefts From Your Checking Account
  • Home Office Deductions: Hoops To Jump Through
  • Income Tax Effect On Single And Married Taxpayers
  • Income Tax Planning For Investments
  • Property Tax Challenges Should Not Be Overlooked
  • The IRS Will Follow Your Wealth To The Ends Of The Earth
  • When Do You Need Life Insurance
  • REITs: A Great Diversification Investment
  • Bank Loan Funds: A Great Fixed Income Investment As Interest Rates Rise
  • Estate Tax Will Be Reduced Gradually, Then Repealed in 2010



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