Three Tough Questions to Ask Your Wealth Management Company
Here are some important and challenging questions to ask your wealth management company.
Are You a Registered Investment Advisor (RIA)?
Wealth management companies usually specialize in the ability to connect you, the consumer, to all of the potential investment options that are available. They will then narrow down your options based on your particular age, risk tolerance, and general preferences. Brokers can usually help you achieve relative success simply by using a large number of tried and true industry standard practices. However, they are under no obligation to ensure your investments are actually sound, worthwhile, or for that matter, affordable.
A registered investment advisor, conversely, is bound by law to act with what is called “the fiduciary standard.” This is a rigorous series of guidelines that ensures that each aspect of your individual investments is compared to alternatives in the industry. While certainly not a guarantee of any kind, this added layer of security will give you the peace of mind that their team is truly dedicated to your fiduciary well-being. Certified Financial Planner™ practitioners, while not legally obligated, act in a similar fashion with restriction and concern.
Are Your Professional Service Fees Compounding?
The technical language often leaves most who attempt to read it feeling lost in their lack of understanding. This often leads to a sort of “blind signing” which can result in paying significantly more money in fees that you might be expecting.
In 2011, the SEC has required many of the documents to be re-explained in plain language for the average individual. The key here is to have your advisor walk you through each aspect of these plain language forms so that you can find out if there are any fees you weren’t expecting.
Are You Interested in More Than My Portfolio?
Believe it or not, good wealth management is about a lot more than which stocks, holdings, and assets are in your portfolio. A great consultant will offer you targeted advice about your financial choices as they relate to your lifestyle. They will give you input on how to plan for large purchases like a home or a child’s college fund. Even more, they are interested in your overall financial well-being. A lot of this process is their ability to balance tax laws with your income distribution and personal goals.
They should be the type of advisor to ask you the hard questions, too, such as, “Are you saving up for that college fund?” If you want to maximize your experience with a portfolio advisor and sum up all of this advice, then you need to establish a relationship of mutual trust. By getting honest feedback, you will be able to make smarter decisions, which will lead to a truly fruitful investment career.