More Investors Seek 'Independent' Advisers—But 'Independent' Has Multiple Meanings


In the aftermath of the financial crisis, the ranks of independent financial advisers have grown, as investors have left Wall Street in search of more objective guidance.

The crisis bred "a certain level of distrust of Wall Street brokerage firms," says Bing Waldert, a director at Boston-based research firm Cerulli Associates. "Independents," he adds, "have been the chief beneficiaries."

Questions to Ask a Financial Adviser

To find a good fit, interview and evaluate several candidates. Be sure to ask the following questions:

What experience do you have, especially with people in my circumstances?

Where did you go to school?

What is your employment history?

What licenses do you hold?

Are you registered with the SEC, a state, or the Financial Industry Regulatory Authority (FINRA)?

What products and services do you offer?

Can you recommend only a limited number ofproducts or services to me? If so, why?

How are you paid for your services?

What is your usual hourly rate, flat fee or commission? Please estimate the possible costs I will pay based on the work to be performed.

Have you ever been disciplined for any unlawful or unethical actions in your professional career or been sued by a client?

For registered investment advisers (RIAs), will you send me a copy of both parts of your ADV registration form?

Will I deal only with you or with others at your firm?

Do you have a conflict of interest I should know about?

Sources: Certified Financial Planner Board of Standards, Securities and Exchange Commission

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Mid Year Suggestions

We have once again reached the mid-year point. Earnings season kicks off again today with Alcoa announcing their results after the closing bell. Mid- year is a good time to review your portfolio and assess your current allocations.  As we head towards the second half of the year, have your goals changed?  Is your budget holding strong?  These are all important questions to address and it is a good idea to review your current financial situation, and strengthen your goals for the remainder of the year.

How to Evaluate Investment Portfolio Performance

Portfolio performance is more complicated than simply looking at "how much I started with and what do I have now." You should put portfolio performance in context relative to investment goals, risk tolerance, and the investment climate for the assets invested. This is a guideline on how investors can measure their investment successes.

Goals. Understanding why you are investing is the first step in structuring a portfolio, as well as in establishing a framework for viewing portfolio performance. There are a few questions investors need to ask themselves and review with their advisors before starting to invest. Specifically, What are my investment objectives? What is this money for? What kind of risk am I willing to take? What is my time horizon? It is important that you work closely with your advisor so you both have a clear understanding of your specific needs and goals.

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Managing the Relationship Between You and Your Advisor

One of the most important issues to consider when hiring an investment advisor is the relationship you hope to establish. A strong affiliation based on communication and trust is critical to the long-term success of your investment relationship. While it is your money that the advisor will invest, there are specific items for which each of you is responsible.


The Facts. To properly manage a relationship with your advisor, it is important that you give this individual the ingredients necessary to manage your account. The assets you are placing under management do not exist in a vacuum. You should provide a full disclosure of your financial assets and obligations and let your advisor know how they currently fit into your financial goals and objectives. Will the advisor handle all of your assets, or a portion of them? What are the assets for: retirement, education, or general long-term growth? When will you need the assets?

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Why Select a CFA® Charterholder?

Successful investors recognize the importance of education and knowledge when it comes to managing financial assets. But while they may spend countless hours learning about markets, securities, and associated risks, investors often overlook the qualifications of the professionals whom they hire to manage their money.

If you work with investment advisors, they will have access to the personal details of your finances, so their credentials should matter to you. There are a number of reputable and applicable credentials that financial professionals in different disciplines may hold, but none is as rigorously focused on investment knowledge as the Chartered Financial Analyst® (CFA®) designation. Understanding the significance of the CFA charter — and what is required of investment professionals in order to hold it — can be useful information when choosing an investment advisor.

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