How do you go about selecting a competent financial advisor who will be able to meet your needs?

First, you must understand the different types of financial advisors who are available. Secondly, in order to make an intelligent, informed decision, you must obtain certain specific information about the advisor.

What kind of advisors are out there?

Financial Advisors take four basic forms: the Broker, the Trust Department, the Insurance Agent, and the Registered Investment Advisor (RIA).

The broker is the most common type. They typically work for large regional or national firms and are primarily compensated by commissions. Brokers, unlike registered investment advisors, do not always have a fiduciary responsibility to act in the investor’s best interest in all aspects of their financial relationship.

Trust departments, typically a division of a regional or nationwide bank, primarily provide investment management services and are reluctant to address the many other aspects of financial planning such as retirement planning, coordination of assets, insurance coverage, and tax minimization.

Insurance agents are limited in the investment products that they can offer. Their compensation is primarily in the form of commission and their regulation is less stringent than the other financial advisors.

The registered investment advisor (RIA) provides advisory services under the supervision of the U.S. Securities and Exchange Commission (the SEC) or the state securities commissions, depending on the size of the advisor. (Gardey Financial Advisors, a registered investment advisor with 200 million dollars under management, is under the supervision of the SEC.) Unlike Gardey Financial Advisors, most registered investment advisors limit their services to investment management and spend little or no time on the other aspects of financial planning such as retirement planning, estate planning, insurance coverage, tax minimization, and college funding.

What information will you need from the prospective advisor?

It is extremely important, before selecting an advisor, to determine what services the advisor will provide and what the cost of services will be. Therefore, the next step in the selection process is to collect information about an advisor. Information is power. The more information you have, the better able you will be to make an intelligent and successful selection. To assist you in this selection process, we have prepared a Financial Advisor Selection Questionnaire composed of 23 questions that you should ask a financial advisor before you decide to employ his or her services.

FINANCIAL ADVISOR SELECTION QUESTIONNAIRE

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1. Will I retain control of my assets and where will they be held?
2. What is the size of your firm and how many clients do you have?
3. How often will we meet, and will a written summary of each meeting be prepared for me?
4. Describe your typical client.
5. What is your investment philosophy?
6. What would my portfolio look like if you were managing it?
7. How are you compensated for the service you provide?
8. How are your fees calculated?
9. How much can I expect to pay for your service?
10. With whom will I be working?
11. What kind of return should I expect on my investments?
12. Would you refer me to an attorney, CPA, insurance, or real estate agent if I needed one? Would you receive any compensation for these referrals?
13. How often will you review my portfolio?
14. What kind of communication can I expect from you on an ongoing basis?
15. May I review samples of materials you give your clients?
16. What is the educational, professional background, and experience of the people with whom I will be working?
17. Will you have discretion to act without my approval?
18. What services beyond that of investment management will you provide to me?
19. How will you coordinate your work with my attorney and accountant?
20. Do you offer advice on the following:
    

    _____	Goal Setting
    _____	Cash Management and Budgeting
    _____	Tax Planning
    _____	Investment Management
    _____	Estate Planning
    _____	Insurance Needs in the Area of Life, Disability, Long-Term Care, Health, Property/Casualty, Liability
    _____	Education Funding
    _____	Retirement Planning
    _____	Alternative Investments
    _____	Medicare Part “D” Prescription Drug Coverage Analysis

21. What has been the portfolio performance of one of your clients who has a financial situation similar to mine?
22. What sets you apart from your competitors?