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Phone: (412) 635-9210
  (888) 236-5960
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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, 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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