Getting The Most From Your Wealth Advisor
Many people have a Wealth Advisor but often contemplate if they’re gaining all they can from the relationship; or they don’t even know what they should be getting for that matter. On this week’s episode of?Upticks, Jake and I discussed five ways investors can get the most from their Wealth Advisor. A summary of our conversion is below.??
Jake:?Thanks for joining me, Cory. People in our industry use all sorts of titles to describe themselves, but here’s what’s important if you’re an investor – working with a?fiduciary Wealth Advisor. That’s because a fiduciary Wealth Advisor is legally required to act in your best interests. Some advisors only act as fiduciaries part of the time, so it’s critical to ask your advisor if they’re a fiduciary with?all?of your investments?all?of the time.??
Relatedly, you should look up your Wealth Advisor on?BrokerCheck.org?to see if they have any “disclosures”—which are essentially client complaints against them. While things happen and a disclosure doesn’t necessarily mean a Wealth Advisor is unfit to manage your portfolio, it’s helpful to have as much information as possible.??
Cory:?Indeed. Our second tip is to work with an advisor team, rather than a single advisor. The days of working with a single advisor are coming to an end as firms like?Falcon Wealth Advisors?continue to offer expanded services. It’s really important to work with a team of smart professionals rather than a single advisor. At Falcon Wealth Advisors, our team of nearly 20 people specialize in?financial planning, investment management,?tax planning?and more.??
Jake:?And I would be wary of any advisor who says they have a virtual team or a large “back office.” You should be meeting with an advisor and members of their team. I personally don’t know how any single advisor can compete with a skilled team of professionals. It’s more difficult for a solo advisor to serve, advise and manage the investments of a large number of clients. And I personally would much rather have many people reviewing and managing my life savings, instead of just one.??
An analogy – when you go to your dentist, they typically have a number of people providing you care. I think most patients would agree this leads to better and more efficient care. It’s the same in our industry. A team can better serve clients than a solo advisor.??
Our third tip is to find an advisor who values?financial planning. What should a plan be and not be? A financial plan is not a roadmap set in stone— as your life changes, so should your plan. Regularly reviewing your plan should be considered a financial checkup to make sure you’re on track to hit your goals in a tax efficient manner while limiting risk. When we review financial plans with clients, we project decades into the future to make sure the plan is on the right trajectory.??
I mentioned tax efficiency. One thing that separates?Falcon Wealth Advisors?is our tax planning approach. While we don’t want to replace your CPA, we can help you look to lower your lifetime tax liability.??
Cory:?Those regular checkup meetings with your fiduciary Wealth Advisor are so important. They’re what enable investors to stay patient, disciplined and committed to their financial plan in bull and bear markets, and everything in between.??
Our fourth tip is to learn the truth about?investment management. What does this mean? It means to know who is making investment decisions for your portfolio and how much they’re being paid. At?Falcon Wealth Advisors, we don’t believe you should have to pay an advisor an asset management fee if they’re not actually managing your investments. As we’ve discussed, many advisors use financial products that charge fees?in addition?to charging the client for investment management.?
Jake:?Not all advisors are qualified to trade individual?stocks?and bonds, as our team does, so that’s one reason an advisor may use financial products like mutual funds. But you are correct that an investor shouldn’t be paying an advisor a fee for investment management if their advisor isn’t actively managing the investments. If you pay an advisor a fee?and?a fee to be invested in?financial products, you’re doubling your fee exposure. This could negatively impact your financial plan in the long term.??
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I mentioned individual stocks and?bonds. We believe buying individual stocks and bonds allows a client to have a diversified portfolio, limits their fee exposure, and?increases transparency. But if an advisor isn’t actively managing your portfolio, there’s no reason to pay them based on the size of your portfolio.??
Cory:?And of course the investment management strategy your advisor pursues should match what’s spelled out in your financial plan. It doesn’t make sense to have an aggressive investment strategy if you’re retired and your plan calls for more conservative investments.??
Jake:?The portfolios we build for clients are aligned with their financial plan. Sometimes clients mention particular stocks they’re not invested in, but we want to avoid adding one-off stocks or bonds to the portfolio unless they align with the financial plan.??
Our fifth tip is related to the previous: be aware of the fees you’re paying. If an advisor is telling you something is free, that’s a red flag. If an advisor is using investment products and it’s not clear how much they cost, that’s also a red flag. I don’t think financial advice should be free, especially when you have access to a team like ours at?Falcon Wealth Advisors. We value transparency and simplicity and that’s why we?list our costs?prominently on our website. Clients deserve to know how much they’re paying, what they’re paying for and when they’ll be charged.??
In summary, here are the five tips to get the most from your relationship with your financial advisor:??
Thanks so much for joining me, Cory. If you want to learn more about how we aim to deliver maximum value for our clients, please don’t hesitate to reach out to [email protected].
Clients choose to work with us to enhance their financial literacy and explain exactly what?their?financial plan means to?them.?
Hightower Advisors, LLC is an SEC registered investment adviser. Securities are offered through Hightower Securities, LLC member FINRA and SIPC. Hightower Advisors, LLC or any of its affiliates do not provide tax or legal advice. This material is not intended or written to provide and should not be relied upon or used as a substitute for tax or legal advice. Information contained herein does not consider an individual’s or entity’s specific circumstances or applicable governing law, which may vary from jurisdiction to jurisdiction and be subject to change. Clients are urged to consult their tax or legal advisor for related questions.?