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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
  • ETFs Can Provide Some Other-Worldly Benefits To Investors
  • Trust As IRA Beneficiary: Not Crazy
  • Should You Fly Solo In Your Own 401(k) Plan?
  • Swap Munis To Your Tax Advantage
  • Sowing Tax Seeds For Capital Gains
  • With Fed's Mission Accomplished, Expect Rate Hikes And Low Bond Returns
  • Five Tax-Smart Ways To Transfer Your Wealth
  • Easier Rules On IRA Rollover Waivers
  • 4 Year-End Strategies For Investors
  • 6 Common Medicare Myths That Should Be Dispelled
  • 5 Key Documents In An Estate Plan
  • 10 Sensible Stock Market Strategies After A Fall
  • Be Aware Of Your Tax Surroundings
  • 4 Good Ways You Could Use An RMD
  • Take Early Withdrawals Penalty-Free
  • Life Insurance In Your Plan? Maybe
  • A New Direction For Your 401(k)?
  • Could Estate Tax Repeal Or Reform Become A Reality?
  • Taking Aim At Target Date Funds
  • Here's What You Can't Do In An IRA
  • 6 Common Estate Planning Myths: Here's The Reality
  • A Plunge, Snap Back, And A Goldilocks Economy
  • How To Avoid Emotional Portfolio Withdrawals
  • When To Harvest Gains, When To Harvest Losses
  • Are You Flying Below The Tax Radar?
  • Slice Through 7 Layers Of Taxes For Investors
  • Stay Focused On The Need For Tax-Aware Investing
  • 14 Sure-Fire Midyear Tax Planning Moves In '14
  • Beware The NII Surtax On Trusts
  • Do You Know The Basics Of 401(k) Retirement Plans?
  • 2014 Global Forecast Offers Hope Bull Market Can Spread
  • For Charitable Trusts, The Tax Icing On The Cake
  • 6 Bad Money Habits For You To Avoid
  • Want To Shift Income? Give It Away
  • Avoid Squabbling Over Your Estate
  • Wall Street Gurus Miss Again On Sector Predictions
  • Dust Off Life Insurance Policies
  • New Law Poses Tax Risks For High-Income Investors
  • How To Choose Trustees For Your Trust
  • Pros and Cons Of Section 529 Plans
  • 7 Major Tax Changes In The Fiscal Cliff Law
  • ''Ghost Story'' Can Haunt Your IRA
  • Who's Going To Pay The 3.8% Medicare Surtax?
  • New 3.8% Medicare Surtax Spurs Year-End Action
  • Selling Short And ''Short Sales Against The Box''
  • The Real Impact On US Markets Of A Greek Default
  • How Important Is The Debt Level To Future U.S. Economic Health?
  • New Study Shows Future Impact Of Great Recession
  • Commercial Real Estate May Boost Your Portfolio
  • If You Must Tap Your IRA Early, Know SEPP Rules
  • Get Up To Speed On Estate Planning
  • What Is A Will, And Do You Really Need One?
  • When Are Two Trustees Better Than One?
  • Money Market Funds Should Shrug Off U.S. Downgrade
  • What The Tax Act Means To Investors
  • Children In College Need A Health Proxy
  • The Tax Fallout From The Healthcare Reform Law
  • How A Solo 401(k) Plan Provides You With An Edge
  • Roth IRA Fall-Back: Re-Characterizing
  • Being An Informed Donor: The Realities Of Charity
  • Donor-Advised Funds Gain In Recession
  • Don't Miss Out On The Zero Capital Gains Rate
  • Finding Hidden Treasures In The New Pension Law
  • Ease Pressure On Loved Ones With Tax-Free Gifts
  • Seven Tax-Saving Moves To Make Right Now
  • Roth IRA Conversion Rule Changes Offer Opportunity
  • Nine Estate Planning Mistakes To Avoid
  • One Way To Reduce The Tax On Real Estate Gains
  • Working Longer To Fix The Retirement Mess
  • Tough Times May Turn 401(k)s Discriminatory
  • You Should Find A New Home For An Orphan 401(k)
  • Low Rates Give Estate Planning A Boost
  • Marriage Doesn't Mean Owning All Your Assets Jointly
  • Do The Math Before Refinancing Your Home
  • As Nursing Home Care Claims Drop, Home-Care Claims Rise
  • Making The Best Of A Bad Time For The Economy
  • Regulatory Guidelines Update
  • Beware Of Social Security Identity Theft
  • Free Credit Reports Available Online
  • Don't Forget About Roth 401(k)
  • Understanding the Importance of a Fiduciary Standard
  • Energy Systems Scale and Timeline
  • The Oil Patch Profit Squeeze
  • Timber As A Liquid Investment
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • Timber Facts
  • Ethanol: Salvation or Panacea?
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • Bank Loan Funds - A Primer
  • 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
  • How Volatile Can The Stock Market Be?
  • What Is Shorting Expense?
  • How Dangerous Is A Dollar Crash?
  • The Case For Industrial Metals
  • GMO 7-Year Asset Class Return Forecast Is Bleak
  • Too Many ''Phish'' In The Sea
  • Identity Theft In The New Year
  • 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
  • Why Not Alternative Fixed Income Investments?
  • Just How Expensive Is The Market?
  • Beware of Brokerage Firms' Misconduct
  • Identity Theft : Correct Those Credit Reporting Errors
  • Risk-Controlled Investing
  • 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: 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
  • Identity Theft: A Note About Social Security Numbers
  • What Do Rising Interest Rates Mean For Money Market Yields?
  • Section 529 Plans Are Popular But Not The Only Way To Go
  • The Importance Of Commodities In A Portfolio
  • A Tale Of Two Hedges
  • Bank Loan Funds: A Great Fixed Income Investment As Interest Rates Rise
  • REITs: A Great Diversification Investment
  • What Is Risk?
  • How To Find A Great Financial Advisor?
  • Is It Time To Find A New Financial Advisor?
  • Year-End Tax Planning Can Help Generate High Return On Investment
  • 4 Steps To A More Secure Investment Portfolio For Your Retirement
  • Medical Practice Succession Planning: Developing A Plan
  • Traditional Investing May Decrease Your Retirement Lifestyle
  • Understanding Deflation
  • Medical Practices Receive Temporary Depreciation Bonus
  • Is Your 401(k) Plan A Failure?
  • Tax Issues To Consider When Buying A Long-Term-Care Policy
  • The ERISA Retirement Plan Law Spells Out Fiduciary Issues
  • Evaluating The Quality Of A Company's Earnings
  • Investing In Times Of Uncertainty And Risk: The Importance Of Diversification
  • Yesterday's Great Companies
  • 2001 Tax Relief Act Changes Education Planning
  • 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
  • Your Medical File Report May Need A Check-Up
  • Do It Yourself Tax Preparers Watch Out: Tax Answers From IRS Centers Oftentimes Are Incorrect And/Or Insufficient
  • 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
  • Year-End Tax Defferal Planning



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