I recently worked with a client who was deeply invested in the stock market. Their portfolio was being managed by an advisor with a major investment firm. The firm was charging, what the client later learnt, was management fees on their cash and low-basis stocks.
Something was lost in translation, which rightly riled my client. They were a long-time client of the advisor and the two had become good friends. “How can I question them? Should I fire them?” They didn’t want to seem ungrateful.
I was the one to act on their behalf.
As an independent, third-party advisor, akin to a fiduciary relationship advocate, I knew how to ask the right questions: What are you charging? What is the client paying all-in? Are there fees on low-basis stocks and cash? What else might you be doing that’s not in the client’s best interest, regardless of it being intentional or an oversight?
Whether you’re working with a top-named financial institution or an independent financial advisor, or managing your own investments and financial affairs, maybe it’s time to bring on an independent advisor to provide guidance, audit the relationship and drive better service.
If your investments are diversified across multiple vehicles, you’re likely not attuned to reading the nuance of the returns of stocks, bonds, commodities, cash and cash equivalents across different portfolios and providers. Many advisors will answer their client’s questions. But what if you don’t know the right questions to ask?
Some advisors, whether deliberately or by benign neglect, might not proactively inform clients about their performance; they may only answer the questions being asked. If you have multiple investment advisors, the potential for confusion only multiplies.
Independent advisors, like myself, are paid a fee and not a percentage of assets under management. Being skilled in investing, with no conflict of interest or profit motive, they can assist investors to pursue the right objectives and risk tolerance to achieve a better long-term outcome.
The relationship starts with a conversation. They need to learn your investment intentions, including your retirement plans, risk tolerance, and family needs. Then, with your authority, they review your portfolio’s performance with your different advisors. With them at your side, you can feel confident that the right and pertinent questions will be asked and answered.
The advisor can translate “market speak” or “banker speak” into plain English, turning their answers to something you can better understand. If a mutual fund is underperforming, they can discuss this with the investment advisor to understand their intent or discuss whether a change of manager is appropriate.
This also includes “attorney speak” or “legalese.” I recently represented a client to assist them in finding an appropriate family law attorney and litigator. Although they themselves are a practicing attorney, the field they practice in is very different and they needed guidance to find someone appropriate.
The need for such guidance isn’t a charge of incompetence. You could be a successful entrepreneur, but that doesn’t mean you know how to manage your money. These are unrelated financial, fiscal, and legal skills; you potentially know the right questions to ask. However, when emotion creeps into the picture the obvious isn’t always visible. This is known as inattentional blindness.
The advisor is not managing the money or making the decisions. They are an extension of the investor or family in sometimes complicated financial or family affairs. We strengthen your relationship with your financial advisors – asking and learning about your family, your concerns, your plans, and ensuring everyone is on the same page. We educate and counsel the family, ask the hard questions and align your interests with that of your portfolio.
We have your back.