If a client sees even one warning sign in his or her financial professional, the client should get a second opinion on the issue from an objective, fiduciary advisor.
Plymouth, Michigan (PRWEB) February 28, 2014
“If a client sees even one warning sign in his or her financial professional, the client should get a second opinion on the issue from an objective, fiduciary advisor,” Titus says. “The client should not delay. A seemingly small issue can balloon into a major roadblock to the financial future the individual wants and deserves.”
One warning sign is frequent trades. According to Titus, frequent trades usually mean that the financial professional is trying to outperform the market, which much well-regarded research shows is a futile exercise. Second, frequent trades increase costs, creating a drag on returns. Finally, if trade sheets show trades marked “unsolicited”—but the client does not recall instructing the financial professional to buy or sell—he or she should check out this red flag immediately.
Titus shares other warning signs in the February 18 Plymouth Observer column (http://bit.ly/1k7YCqT):
1. Not a fiduciary. Be cautious of a professional who is unwilling to certify in writing that he or she will act as a fiduciary on your behalf both when giving advice and recommending products.
2. Vague process. Expect the professional to follow a well-defined consultative process to clearly understand your situation, goals, and timeframes before making recommendations.
3. Tax talk avoidance. Even if your advisor is not a CPA, he or she should discuss ways to create tax efficiency in your portfolio or coordinate planning with a tax expert.
4. Pressure to buy. Be wary of a professional who will earn a commission by convincing you to change your life insurance policy or annuity.
5. Unbalanced risk. Your financial professional should develop a written investment policy that demonstrates a diversified portfolio with several asset classes, reflects your risk tolerance, and is rebalanced periodically. Anything less is a warning sign.
6. Unclear compensation. Make sure you completely understand how your professional is compensated and get it in writing.
“As our tagline states, ‘From financial wisdom, better stewardship.SM,” Titus says. “If you see any of these signs, get a second opinion. You won’t regret it.”
AMDG Financial (http://www.amdgservices.com) is a fee-only fiduciary registered investment adviser (RIA) in Plymouth, Michigan. The firm manages approximately $66 million in assets for clients. AMDG Financial was one of the first 10 firms, globally, to be certified by the Center for Fiduciary Excellence (http://www.cefex.org) as following global best practices for investment adviser fiduciaries.
