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How To Find A Great Financial Advisor

When searching for a financial advisor, there are a number of steps to take in finding an advisor who will be great for your situation.  First, 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 (Fee only is best.  Watch out for Fee-based advisors.  They earn commissions on products sold, but are trying to make themselves sound like Fee-only.), credentials, frequency of contact and willingness to develop a long-term fulfilling relationship for both parties.  Furthermore, does your potential advisor have investment research capabilities and services such as The Bloomberg Professional Investment Research Service and Morningstar Principia Pro Plus and/or Morningstar Workstation to analyze individual equities and mutual funds respectively?

Evaluate your future advisor by asking him the following questions:  “How frequently will you contact me?”  The answer should be usually “monthly”.  The next question is, “How long does it take to respond to client inquiries?”  The answer should be “usually within twenty-four (24) hours.”  Will the advisor provide investment tax planning services as well as calculate the cost basis information on securities in addition to preparing the investment gains and losses information for income tax reporting purposes?  How often will your advisor report performance (a percentage gain or loss on the amount being managed)?  Quarterly reporting is the norm.  Brokerage statements don’t report performance.  Also, The Securities and Exchange Commission requires advisors to provide clients with their ADV part II upon signing a contract.

Other tips include, avoid advisors who are employed by Wall Street brokerage houses.  These brokerages continually are being fined by government agencies and sued by ex-clients for securities manipulation and fraud.  Most brokers are not crooks, but many sell very expensive managed money accounts, which significantly reduces an investor’s return.  The SEC, NASD and the Pennsylvania Securities Commission should be contacted to determine if the advisor has had any securities violations.  Avoid one-product-solution advisors, such as individuals selling annuities only or life insurance for every problem.  Banks have their conflicts as well.  Frequently, their bias is in the form of attempting to sell mutual funds which they own or those with high commissions.  Even in their trust departments, banks frequently recommend only large U.S. stocks and bonds, not exactly a formula for success in the next decade due to the high valuations of stocks and the fact that rising interest rates will harm bond values.  It is always better to create a relationship with an advisor that is “advice-driven”.

Furthermore, does the potential 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 your auto, homeowners and umbrella liability insurance?  The best advisors provide these services. 

If the answer to most or all of these questions is no, then you should think about searching for a new financial advisor.  A great source to find an unbiased advisor is The National Association for Personal Financial Advisors (NAPFA).  All of NAPFA’s advisors are screened for the problems mentioned above.  Best of all, NAPFA advisors are compensated on a fee-only basis.  To search for a NAPFA advisor go to www.napfa.org or call their toll free number (800) 483-5415.

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



INDEX
  • Six Tax Items For Small Businesses
  • Now Is A Perfect Time To Open A New Business
  • Do You Know If Your Business Really Is Small?
  • 4 Estate Issues For Business Owners
  • Self-Employed? Map Out Tax Details
  • 10 Easy Steps To Take If Opening A New Business
  • To Buy Or Not To Buy: That Is The Business Franchise Question
  • Ever Considered Helping Your Adult Child Open A Business?
  • Do You Know What Kind Of Business Not To Open?
  • Do You Plan To Move Your Business To A New State?
  • Dispel These 7 Popular Myths About Retirement
  • 4 Retirement Plan Options For Your Small Business
  • Are Stocks Overpriced And Forming A Bubble?
  • 4 Steps To Creating A Dynamic Business Budget
  • Can An Underfunded Small Business Startup Be Successful?
  • What Happens If You Have Excess Capital Losses?
  • This Is Not Granddad's 'Defined Benefit Plan'
  • Despite Much Pessimism, Slow Growth Persists
  • How To Take Your Section 179 Deduction To The Max
  • Squeeze More Out Of Bonus Depreciation Deductions
  • A Common Error In Powers Of Attorney
  • For The Self-Employed: 4 Retirement Plan Choices
  • Which States Are The Most Friendly To Businesses?
  • How Economic Myths Distort Investment Outlook
  • Don't Forget About Roth 401(k)
  • REITs: A Great Diversification Investment
  • Shopping For A Bank Account That Pays The Highest Possible Rate Of Interest
  • The Twenty Top Tax Breaks In The New 2010 Tax Act
  • Investing Defensivley Does Not Mean Deserting Stocks
  • 401(k) Alternatives For Business Owners
  • Tax Court Okays Deducting Cost Of MBA
  • Employers Find Ways To Mitigate Liability On 401(k)s
  • Working Longer: What's A Post-Retirement Job Worth?
  • Slash Taxes By Swapping Like-Kind Assets
  • Transferring The Family Business To Your Heirs
  • Business Owners Get Big Tax Cuts In Recovery Act
  • Move Fast To Corral Emergency SBA Loans
  • Risk Management
  • Estate Taxes And The Obama Administration
  • Gifting A Business Can Cut Estate Taxes
  • A Little Bond Logic Yields Insights
  • Avoiding The IRA Rollover Crackdown
  • Ruling Cites Business Owner Responsibility to 401 (k) Plans
  • Ruling Cites Business Owner Responsibility to 401(k) Plans
  • How Much Is Your Business Worth?
  • Managing Cash Flow In Tight Times
  • When Times Are So Scary, Opportunities Emerge
  • Avoid Being Accused Of Insider Trading
  • Lifecycle Funds May Pose A Hidden Danger
  • Funding A Friend's Business Venture
  • Beware Of Social Security Identity Theft
  • Regulatory Guidelines Update
  • Small Business And Work Opportunity Tax Act
  • The Oil Patch Profit Squeeze
  • Free Credit Reports Available Online
  • Understanding the Importance of a Fiduciary Standard
  • Energy Systems Scale and Timeline
  • Timber As A Liquid Investment
  • Timber Facts
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • Bank Loan Funds - A Primer
  • Ethanol: Salvation or Panacea?
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • A Primer On Managed Futures
  • Identity Theft: What Documents Should You Shred Or Store?
  • The Case For Industrial Metals
  • Total Credit Market Debt (All Sectors) As % Of U.S. GDP
  • Know The Score
  • 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
  • Bank Loan Funds: A Great Fixed Income Investment As Interest Rates Rise
  • What Is Shorting Expense?
  • How Dangerous Is A Dollar Crash?
  • How Volatile Can The Stock Market Be?
  • 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
  • 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 : 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?
  • Exit Gracefully: How Business Owners Should Plan For A Comfortable Retirement
  • Section 529 Plans Are Popular But Not The Only Way To Go
  • The Importance Of Commodities In A Portfolio
  • A Tale Of Two Hedges
  • IRS Refuses Change Of Section 179 Election To Expense Depreciable Property
  • Small Businesses Need To Be Aggressive On Costs
  • 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
  • Home Office Deductions: Hoops To Jump Through
  • Property Tax Challenges Should Not Be Overlooked
  • The IRS Will Follow Your Wealth To The Ends Of The Earth
  • Year-End Tax Defferal Planning
  • How To Find A Great Financial Advisor
  • Is It Time To Find A New Financial Advisor?
  • What Is Risk?
  • 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
  • Businesses Receive Temporary Depreciation Bonus
  • Understanding Deflation
  • Is Your 401(k) Plan A Failure?
  • Succession Planning: Developing A Plan For Your Business
  • 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
  • Tax Issues To Consider When Buying A Long-Term Care Policy
  • Yesterday's Great Companies
  • Businesses Should Be Aware Of States' Use Taxes
  • Expanded Retirement Plan Contribution Limits Create New Opportunities For Business Owners
  • Succession Planning: Developing A Plan For Your Business



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