How to Grade Your Financial Advisor?

A client recently posed an interesting question, “How do I grade your performance as my advisor?” He was very satisfied with his overall experience, but was unsure how to effectively measure value in the relationship. His initial thought was to compare the performance of his portfolio to the S&P 500 but felt that was not very relevant since his allocation was so different from the S&P. In addition, so many of his recommendations were not portfolio related, so his other thought was to calculate the monetary value of recommendations compared to fees paid.

This type of question often arises when engaging professionals, whether a financial advisor, attorney or a doctor.

Measuring value can be quite subjective; therefore, it’s important to first consider the capacity in which you engaged the advisor and their scope of responsibility. Did you engage them for an isolated transaction or service, such as managing a portfolio, or was it for a comprehensive wealth planning experience where they serve as a proactive resource and guide. There can be a big difference in services depending on how involved you are with a professional.

Here are a few key questions worth addressing to help ensure a healthy relationship:

Does your advisor spend most of his/her time helping you crystallize your most important objectives and developing recommendations that uniquely fit you?

Does their process provide you with increased clarity and perspective over your total financial picture (not just investments) so you have the confidence to move forward with a strategy?

Are they holding you accountable to your goals and helping you complete your financial projects, such as implementing an estate, asset protection or retirement planning strategy?

Is your portfolio tailored to meet your objectives and risk tolerance?

Advisors are there to guide you to making smarter decisions with your wealth. An effective financial strategy will include recommendations that stretch far beyond your investment portfolio, and should address areas such as estate planning, cash flow, taxes, insurance, business succession, and asset protection. The key consideration to the question of value is whether your advisor is effectively helping you move closer to your end goal. If you did not answer ‘YES’ to all the questions above it may be worth your time to consider a second opinion.

Prior to investing, you should consult a financial advisor and read all available information. The examples given are hypothetical, for illustrative purposes only. The product features mentioned must be sold by prospectus and carry investment risk. Investment advisory services offered through Verde Wealth Group, LLC, a state registered investment advisor. Securities offered through ValMark Securities, Inc. Member FINRA, SIPC. 130 Springside Drive, Suite 300, Akron, Ohio 44333–2431. 1–800-765‑5201. Verde Wealth Group, LLC is a separate entity from ValMark Securities, Inc. © 2016 Verde Wealth Group, LLC. All rights reserved. This article was initially published November 2012.


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