In the same way as beauty is more than skin deep; you need to look below the surface to find those you can trust when it comes to financial advice.
Recently I read two articles that underscored the value of looking below the surface when seeking financial advice. The first was about the seemingly unending scandal at Wells Fargo, “Wells Fargo pushed wealth advisors to use high-fee products, cross-sell”. The second article was entitled, “Why active-mutual-fund portfolios increasingly look like indexes,” and it went into arcane detail about how investment products operate.
These articles reinforce the challenges investors face when seeking advice. Who do you turn to when household names, such as Wells Fargo, betray the trust we have long held? The second article tells us there is more to the answer than simply avoiding the taint of scandal.
More involves an understanding of how investments and investment markets work that leads to more effective investment decisions. And, more involves knowing who you can rely on for trusted counsel on the journey towards happiness, security and peace of mind.
To help you in these two specific areas, let me share two crucial criteria gleaned from my recently released book, Investing3.0: What the Creators of Index Funds Discovered and How to Profit from It,
1. Require any advisor you’re considering to be an independent registered investment advisor (RIA), to avoid conflicts of interest, and to commit in writing to put your interests first, which is known as serving as a fiduciary.
2. Avoid advisors who tout their diligence by using a “watch list” to monitor and replace underperforming investments. Having a watch list means that the advisor has recommended too many investments that have not performed as well as expected. Taking it a step further, if too many of your advisor’s recommendations underperform, you are less likely to follow their advice, particularly at times when you need it the most, such as during the peaks and valleys of investment markets or when facing important personal decisions.
If you have questions about how investments and investment markets truly work or want a second opinion about important decisions you are considering, contact me to discuss how I might be able to help you.
Lastly, if you know others who could benefit from this message, please share it with them and let them know that I’m available for a consultation.