As the Wall Street Journal writes, "Getting all stockbrokers, financial planners and insurance agents to act in the best interests of their clients is a struggle that financial firms and their regulators still haven’t resolved. That should be their job — but for now, it’s yours. The obligation of those who give investment advice to serve clients, not themselves, is called fiduciary duty. That obligation is far from universal and, in some ways, is in retreat. That means asking an adviser the right questions (and listening for the best answers). I encourage you to clip or print out this column and bring it to your next meeting with your financial adviser."
ARE YOU ALWAYS A FIDUCIARY, AND WILL YOU STATE THAT IN WRITING?
DOES ANYONE EVER PAY YOU TO ADVISE ME? DO YOU EARN MORE TO RECOMMEND CERTAIN PRODUCTS OR SERVICES?
DO YOU PARTICIPATE IN COMPANY SALES CONTESTS OR AWARD PROGRAMS THAT CREATE INCENTIVES FOR YOU TO FAVOR CERTAIN VENDORS?
WILL YOU ITEMIZE ALL OF YOUR FEES AND EXPENSES IN WRITING?
Yep! It's a short list.
ARE YOUR FEES NEGOTIABLE?
WILL YOU CHARGE ON A RETAINER BASIS INSTEAD OF AN ANNUAL FEE BASED ON MY ASSETS?
Yes, we do not base any fees on asset size.
CAN YOU TELL ME ABOUT YOUR CONFLICTS OF INTEREST, ORALLY AND IN WRITING?
Sure, and we have minimized all conflicts of interest to the extent possible.
DO YOU EARN FEES FROM A PRIVATE FUND OR ANY OTHER INVESTMENT THAT YOU MAY RECOMMEND TO CLIENTS?
DO YOU PAY REFERRAL FEES TO GENERATE NEW CLIENTS?
DO YOU FOCUS SOLELY ON INVESTMENT MANAGEMENT, OR DO YOU ALSO ADVISE ON STUDENT LOANS, RENTING VS. BUYING, HEALTH CARE COSTS, & LIFE INSURANCE?
Actually, we focus primarily on comprehensive financial planning. Investment management is only one piece of that puzzle.
DO YOU EARN FEES FOR REFERRING CLIENTS TO SPECIALISTS LIKE ESTATE ATTORNEYS OR INSURANCE AGENTS?
WHAT IS YOUR INVESTMENT PHILOSOPHY?
We base our investment suggestions on the most time-tested research, which favors low-cost index funds and ETFs. We place a priority on minimizing fees.
DO YOU ENGAGE IN TECHNICAL ANALYSIS OR MARKET TIMING?
DO YOU BELIEVE THAT YOU CAN "BEAT THE MARKET?"
HOW OFTEN DO YOU TRADE?
As infrequently as possible.
HOW DO YOU REPORT INVESTMENT PERFORMANCE?
When we discuss your portfolio's investment returns, we first deduct all expenses. We then compare your portfolio returns (over both the short-term and long-term) to an average of highly similar assets.
WHAT ACADEMIC AND PROFESSIONAL CREDENTIALS DO YOU HAVE?
I have an undergraduate business degree from Georgetown University and an MBA in finance from Georgia Tech. Professionally, I hold a Series 65 license, my company is a Registered Investment Advisor (RIA) in D.C., and I'm scheduled to complete the Certified Financial Planner (CFP) examination in July 2018.
AFTER INFLATION, TAXES, & FEES, WHAT IS A REASONABLE ESTIMATED LONG-TERM RETURN ON MY PORTFOLIO?
For return projections, I rely on the most rigorous, unbiased analysis that I can find. For now, I would estimate about 3-4%.
WHO MANAGES YOUR FAMILY'S MONEY?
I do, and I invest in the same assets I recommend to clients.