As an investor, there are so many factors impacting the economy, both domestically and globally, as well as the markets. How does one make sense of the markets and position your portfolio for success?
The last few months have revealed potential major changes to our health care system, the possibility of tax reform and the forecasted unwinding of the Federal Reserve’s balance sheet.
With the introduction of automated financial advisers, there are more options to consider when choosing an investment professional. Do you need personalized advice? Do you want to sit across the desk from someone and talk through issues, or is an online platform right for you?
Now is a good time to evaluate the person and company giving you financial advice. Some of the following questions can reveal a lot about what to consider in the person or company you choose to manage your life savings.
• History of the firm. How long has the company been in business? Is the firm a startup or well established in the community? Is the firm well capitalized, or will it sacrifice customer service to bring in new sales revenue? Also be sure to ask about its errors and omissions insurance coverage.
• Experience. How is investment policy established? What are the sources and partnerships for market and investment research? Is there a tax officer on staff? How can you be sure all the tax basis information on your accounts is correct?
• Fiduciary. Does the firm select investments that are the best for your situation, or are there other incentives influencing its recommendations? Can the representatives confirm, in writing, they will work with you as a fiduciary? Ask about all fees inclusive of the adviser’s fee and any internal mutual fund fees that may apply. Are they able to provide you with the very best pricing as an institutional manager of funds? And if you need a Medallion signature guarantee for transferring assets, can they provide one?
• Compliance. What systems are in place to ensure proper accounting and confidentiality? Who ensures adherence to the investment policy you agreed to? What types of checks and balances are in place to avoid mismanagement or the possibility of a Bernie Madoff scenario? Ask them to describe any regulatory oversight and who is the point person for meeting with auditors and regulators to ensure all processes and policies are adhered to and appropriate for clients.
• Operations. Transferring your life savings is a big deal and must be overseen by a professional with an eye for detail. What experience does the operations manager have, and how many people are employed in the operations department?
Just remember, you are more than your investment portfolio. It’s a good idea to periodically evaluate your adviser, their business model and all of the other services they can offer you related to financial planning, tax strategies and estate planning ideas.
Certified Financial Planner Andrea McKinney is vice president and wealth management consultant for Central Trust Co. in Springfield. She can be reached at andrea.mckinney@centraltrust.net.
