We the investors of the world have provided the funds that corporate America has needed to finance their growth over the past 2 hundred years in return for the directly to share in that growth and profits previously only afforded owners. The investor/ management relationship worked as kitchen staff out so well that a whole industry evolved to satisfy the growing number of investors needs for information and advise to assist investors in making sound investment decisions. The Financial Services Industry, which originally was only available to the very wealthy, has exploded over the decades to be the provider of investment information to roughly 40% of American families.
Most financial consultants are affiliated with large investment firms that launch the business’s collective knowledge, information and expertise to their cadre of expert to pass around to individual and institutional investors. Theoretically this gave those investors associated with large firms potential for returns that could not be achieved on their own or with an association with smaller or independent expert.
Thus the Financial Expert that advised all of us was actually taking the firms “expert knowledge”, establishing it to your sterilizing and advising us where we should be investing our savings to achieve our financial goals. We were told that since 1900 if you stayed committed to a well diversified collection you would not have less proper you started in any ten year period.
So what happened over the past decade? Most of us lost a substantial part of our savings in the 2001 Tech Bubble just to loose more in our savings in the Bass speaker Prime Bubble. The $100, 000 that we had in Economy is shown 2001 shrank to $60, 000 by April 2003 then grew to $80, 000 in Come early july 2007 and is now worth $40, 000 today. We’re eight years closer to retirement and wondering how we are going to survive if we ever do get to stop working.
Do we just plan on earning a living for the rest in our life? Do we work until we can’t then go in Medicaid and contentment be a deplete on the united states economy? Do we take what we have left and create a strategy and lifestyle that will allow us to live out a cushty life without being an encumbrance on or children and our country?
I know think the last option is the best option, but it is going to take an adjustment in our thought patterns and lifestyle. One of the adjustments has to be in how you look at the investment markets and out financial consultants. Whether you should change Model Portfolios for Advisors Financial Consultants or not, now is the time to asses the performance of your current expert and decide if it is time to create a change. I am talking about a Financial Expert not an Investment Expert, there are less then 5% of the world’s population that needs to be seeking the services of an Investment Expert. The investment markets are not a place for many of us to turn to make money; they are a place for us to preserve money that we have remaining and grow that capital at reasonable rates of return.
The first step in choosing your new Financial Expert is for you to decide what you want from your expert after your attitude adjustment. Here are some of my suggestions:
i Help me preserve money I have left and grow it at a conservative rate of return.
i Help me to live within my means and set an investment strategy based on my needs and goals.
i Help me protect my children form losing my earning ability or my death.
i Help me and my children achieve our financial goals prior to retirement.
i Help me accumulate enough to enjoy a cushty retirement.
i Help me assess my need for long term care insurance.
i Help me establish and est plan.
Once you know what you want from your expert you’ll need to find a qualified provider. As with all professions the first training course you need to look for is education. Your potential consultants will have a set 66 or a Series 7 sec licence as well as an insurance licence and a variable products licence. A set 66 allows them to sell mutual funds and a Series 7 allows then to sell stocks, bonds, options as well as mutual funds. A set 7 is a more in-depth length of study then the Series 66, so I’d eliminate anyone who doesn’t have a set 7 sec licence.
Seventy percent of the people which represents themselves as Financial Consultants stop their education beyond their the necessary licenses and their required annual continuing education. It’s the other 30% of the consultants that you are looking for. These are the people with initials behind their names which represents professional designations. At the top of this designation pecking order is the CFP (Chartered Financial Advisor) designation. A CFP is related to a master’s degree in financial planning; it takes four years of study and at least four years of practical experience. To find a CFP in your community go to: cfp. net/search. Other designations like the ChFC (Chartered Financial Consultant) and CLU (Chartered Life Underwriter) are focused on specific portions of the financial advisory field. These designations are much like Board Certification in the medical fields, and I know would not put my finances in the hands of anyone who doesn’t take their profession seriously enough to look for all the education which can be found. This search can leave you with a list of three to more than 200 depending on the size of your community. I would recommend that you check BestofUS. com a website that lists the best of ten professions across the united states. This should help you bring your list down to a manageable number of qualified consultants.
Next go to the NASD (National Association of Sec Dealers) website and look up your short list of qualified consultants. (finra. org/Investors/ToolsCalculators/BrokerCheck/index. htm) Here you’ll be able find out your potential consultants work history, licence history and if they have had any legal or disciplinary action brought against them. We’ve used some pretty tough financial times over the past a decade and plenty of good consultants have been sued, so make use of this information as an approach of asking your potential consultants some tough questions. “Can you tell me what these issues are about? inch Now Google your short list and see what you find; you’ll be surprised what you’ll learn.
At this point, you need to sit down with those left on your short list. Here is a list of questions that you should ask.
i What is your approach to financial planning? If they don’t address the “Help me” points above their not a Financial Expert. If they start talking about Managed Accounts, Sector Investing, Momentum, Technical saying Fundamentals, or Option Strategies your talking to and Investment Expert.
i What was your book of business worth on 03 1, 08 and what is your book of business worth today? Can i see supporting reports? Their going to ask to see finances, it’s fair for you to ask to see theirs and if it’s down more then 25% you’re in the wrong place.
i How are you paid? There are only three possible answers here; commissions, asset base compensation, or fees. Most will be a combination of the three possibilities; this you want to take into consideration is commissions. Commissions can create a conflict of interest. Asset based compensation means as your assets grow their compensation grows or as your assets go down so does their compensation. I liked that it results in a common objective. Fees will involve special work like a financial plan or a scientific study relative to your distinctive situation, and that is fair.
i How often will we meet to review my situation? This needs to be at least twice a year.
i Tell me about yourself. How long have your been in the business? Do your have any professional designations? Have you had any legal or disciplinary action taken against you? What is your employment and education background? Have you written any books or articles that we can read? You know all the answers, just sit by and judge.
If you’ll follow this process you’ll find the best Financial Planner for you. You may end up with the person you’ve been using, but you now know they are qualified to offer the service that you need from your new Financial Expert.
Choosing your best Financial Expert is as important as choosing your best Physician, so do your homework and then take responsibility for your decision. As is managing your health you have to take an active role in the management of your finances; stay involved and understand everything.