How to evaluate an Advisor (Advisor Questionnaire) Show Transcript

Advisor Questionnaire

Advisor Questionnaire Download

Hello, and thanks for joining. In today’s show, we’re going to answer the simple question, how do I evaluate an advisor? My name is Terry Martine, I’ve been working with retirees in the Florida Retirement System for close to 20 years. This show is for you, if you don’t have an advisor, if you have an advisor, but haven’t talked to them in a while, or if you talk to your advisor every day and haven’t looked them up. In order to get the most out of today’s show, we suggest you listen all the way through to the end, then come back and take notes, or listen to the sections you found most useful. Now before we give you the four questions to evaluate a financial advisor, let’s first look at the why people hire advisors in the first place. First off 50% of what an advisor does, you could do for yourself. Most of the information about a portfolio manager, mutual funds, stocks, historic performance, and most insurance products can easily be found on the web. So really, what you’re doing is you’re paying for the other 50% that you can’t do for yourself. In other words, it’s an advisors experience and knowledge of financial matters that you’re looking to get from somebody to help you build a solid foundational financial plan. A yacht broker client clearly put it to me. He said, If you’re looking for a sailboat, you come see me, I know the sailing characteristics of most boats out there. And I’m going to ask you a lot of questions about where you’re going to go sail, how long you’re going to be on the boat, if you’re going to be living aboard? Are you going to be bringing your spouse? Are you going to have kids on board? how long you’ve been sailing and many, many other questions, because I can help guide you to the right type of vote from my experience. So that’s what I’m expecting of my advisor. And so I always remember that. But beyond knowledge, there’s one more key piece of the puzzle. And maybe it’s the most important piece, and that’s to keep you accountable. In other words, a coach, you see the only way to make a change, and I’m talking significant change and lasting change is to hire a coach. Think about the great people out there like Tiger Woods, Tom Brady, Dolly Parton, Leonardo DiCaprio, what did they have in common? They all had coaches, whether it was an acting coach, singing coach, or maybe a workout coach, all four had someone pushing them and holding them accountable. They help you set up realistic, tangible and attainable goals, it’s much easier to save 10% of your income every month, than it is just to save what’s left over. In other words, let’s say you make $5,000 a month, it’s much easier to take that $500 and put it in a separate account, whether it’s an IRA 401k. If you put that money aside, it’s much easier than if you say I’m just going to put whatever’s left over at the end of the month. So what we’re looking to do here is we’re looking to have goals that are quantifiable. Now my wife decided that she wanted to run a half marathon. So she went out and bought a training plan, actually, I think was an app on her phone, but it gave her daily running goals. It started off with walking and built up to a 10 mile run the week before the event. What am I saying? I’m saying that in order to accomplish a goal, it needs to be broken down into manageable and attainable pieces. Now let’s look at the difference between two people’s goals. The first person says I want to retire as a millionaire. And the second says, I want to retire a millionaire live near the beach in Tampa, put both my kids through college without taking a loan, leave money to charity when I pass on and have a long term care policy. So I’m not a burden to my spouse or my family when I get older. Do you sense the difference? Can you feel the difference? Not only do we need to set up goals, but they need to be specific with a goal. The best way to do this is to get yourself a notebook or some way to keep track spreadsheet. And I suggest to my clients to go out on find the house that you want printed out. Put a picture of that in the notebook, pick out the university where where you want to send your children write a check out the charity put that in the book, quantify these goals and and find something that’s going to illustrate these goals to you as a constant reminder. Whatever these goals are, you need to visualize it and make it quantifiable if your financial goal is to have one and a half million dollars when you retire. an advisor can calculate how much you need to be saving each month. If you’re 40 and want to retire at 65

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Gives you 25 years to attain your goal. Right in update your book each month. You know, write down keep track of your progress to the goal. It doesn’t matter if you again, use Excel, notebook calendar, whatever you want to do, just write it down and keep track so you know that you’re on target each and every month. Do you want to know the secret to losing weight, and it’s super cost effective, it only cost you about $20. The most effective way to lose weight is to jump on a scale and track your weight every day, write it down, I bought one of those scales that links to my phone, so I don’t have to write it down anymore. It charts my weight every day. And when that line starts curving upward, I know almost immediately that I’ve been eating what I shouldn’t be eating. You see, there’s something psychological about knowing you’re going to be on that scale tomorrow that keeps your eating and control. And it’s the same with your financial plans. If you keep a sheet on where you are and where you’re going to go, you’ll stay on target. Back to the four questions, you ask an advisor, if you’re interested, we have all four questions written out on advisor questionnaire under the forum section on our website, I’ll put a link in the show notes. So you can easily find it. Easiest way to do this is to print this off, give this to an advisor that you’re talking to or thinking about hiring to manage your account and have them fill it out and sign it. And that way you can have 234 different advisors. And you can see very quickly, you can compare the different advisors onto question number one, what securities licenses do you hold? And what is your CRD number? Are you license a series six, series 7, 65, or 66?  All they have to do is circle the ones that they are licensed for. And so this is why we asked that question. Ideally, you’re looking for a person that is either 65 or 66. The reason why I say that is a 65 or 66 means that person is a registered investment advisor and a fee only advisor. More importantly, those advisors must act as a fiduciary for their clients. They’re legally bound to put the interests of their clients before the interest of themselves, you’re going to get their CRD number and that’s important. Every advisor has a unique CRD number that’s assigned to them by FINRA or the securities exchange commission. Just go to the web and type in broker check. You know you’re at the right one. When it says broker check that Once there enter their CRD number, you could try it by name, but there might be 10 different advisors with the same name. But that CRD number is going to be unique. The site is going to give you a lot of valuable information when you’re evaluating advisors. You’ll see how many years of experience they have, where they’ve been employed. And most importantly, there’s going to be a line that says disclosures. Now a disclosure is a negative mark. Advisors are required to disclose this to clients. if they have any negative information. It could be a bankruptcy client complaint, a criminal or civil proceedings, anything that the government has decided that you need to know about that individual is going to be on that disclosure report. Question number two, do you hold an insurance license? If so what states and also the license number, if you’re looking for an advisor to help you with all aspects of your finances, then you’re going to want to make sure that they have an insurance license. It’s like going to a doctor because you broke your arm in the doctor puts a cast on your foot. You ask the doctor Why don’t you fix my arm. And the doctor says I’m a podiatrist. What did you expect? So quite a few advisors don’t have an insurance license. And that’s okay if you just want somebody to handle your investments. But if you’re looking for someone to help you with life insurance, long term care, disability insurance, Medicare, it’s gonna it’s going to serve you best to find someone with both disciplines. Question number three, what are my fees? And how often do I get charged? Pretty simple. advisor fees range anywhere from 2% on down to point two 5%. They’re all over the board. But it’s pretty simple. If you get them to put it in writing, you’ll be able to evaluate the advisors much, much easier. Question number four. How many Florida Retirement System clients do you have? This one just gives you a simple idea of how many clients they have in the FRS system. If the number is one, you might want to keep looking. As you know, the FRS system is quite a bit different and you have a lot of different options than in your typical retirement plan. And really, it needs to be customized for the Florida retirement system. If the advisor has 1000 clients Now you may have a hard time contacting them when you have a question and you

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You may not get very good service. That’s it. There’s four basic, simple questions, you can get this form as a PDF from our website. Again, it’s labeled as advisor questionnaire, you can download it and print it off and send it off to them or send them the PDF. We did add a statement at the end of the form that says the advisor must put their client’s interests ahead of their own, and disclose all conflicts of interest when offering advice or products for retirement related account. This is why we put this in there is that you’ll be surprised at how many advisors will balk at or simply won’t sign a form that says they’re going to put your interests first as a registered investment advisor. That shouldn’t be an issue because they’re legally bound to do this. Anyhow, as you can see, these four simple questions allow you to make an informed decision on who to hire. My suggestion would be to find someone with a clean state and federal background, works as a fiduciary has between 103 100 clients also has their insurance license. If you’re able to find someone to match those basic criteria, we are on the right path. Please subscribe to our show. And if you do have any questions or you need somebody to reach out to, or if you can’t find a an advisor in your local area, just give us a call. We’d be glad to help. Thanks again, and we’ll talk to you soon. You should consult a financial advisor familiar with the specific circumstances of your unique financial situation before making any financial decisions. Nothing in this broadcast constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature, and are not a guarantee of future returns. Terry Martine is an investment advisor representative of FRS investment advisors, a Florida investment advisory firm