I will confess that writing these columns has been cathartic, enabling me to share my insights from twenty-three years (and counting) in the financial services industry. Sometimes, I address “touchy” subjects, like how financial advisers are paid and how they conduct business. Ever-loving and still a bit protective, my Mom has cautioned me to be careful when writing about these subjects. Of course, Mom is right (and I’m not just saying that because she is reading this). Her words take me back in time, to a sign in the office of my high school guidance counselor, which read, “You don’t have to put out another man’s flame for others to see yours.” Those words made a lasting impression on me. I will share my observations and opinions as “respectfully” as I can, but I will continue to share them. Why? Because the reality is – some investors get awful advice. It is a shame, and it is preventable. So for the next few weeks, join me as I share some clues to help you determine if a second opinion would be beneficial as you PlanStronger™ for your financial future.

 

1. Communication. Do phone calls to your adviser’s office go directly into voice-mail? Do you feel your calls are not returned promptly? (Industry surveys show that most consumers expect a return call within twenty-four hours.) Another communication-related problem can arise when an adviser doesn’t seem to be able to answer your questions. Does he always have to “check and get back with you”? If an adviser has to double-check every answer, key information could get lost during the process or in translation.

 

2. Disclosure and Latitude. Has your adviser forthrightly disclosed all fees associated with the investments he has recommended? Did the adviser adequately disclose his compensation before you signed the paperwork? If the answer is “no” to either question, the obvious, and potentially revealing, question is, “why not?” I’m of the opinion that an adviser should know the cost of every investment he recommends. How can a product be “good” for you if he isn’t aware of the costs? Inadequate consideration of fees could simply be a lack of attention to detail or it could be a lack of lower-cost investment choices at that particular firm. (A related side-note: Has your adviser recommended that most of your money go into just one investment or be invested with one insurance company? Rarely have I seen this make good financial sense.)

 

3. Gut Check. Yes, do listen to your inner voice. Many investors seeking a second opinion have told me, "something just didn’t seem right.” I could give you many examples of such situations ... very often, the investors have been correct.

Once again, I’ve run out of room; more clues to follow next week!

 

 

 

 

Have a financial question you'd like answered here? Email: Questions@PlanStronger.com

 

 

 

 

 

 

 

 

 

 

 

 

David D. Holland, a CERTIFIED FINANCIAL PLANNER™ practitioner, hosts a weekday radio show at 9AM on AM1380 Ormond Beach, AM1230 New Smyrna Beach and AM1490 Deland. He has also authored two books in his Confessions of a Financial Planner series. Holland offers investment advice through Holland Advisory Services, Inc., a registered investment adviser in Ormond Beach. He can be contacted at (386) 671-7526. Email your financial questions to info@DavidHolland.com.