Hiring an Investment Adviser? The North American Securities Administrators Association (NASAA) has published a brochure titled “Cutting through the Confusion: Where to Turn for Help with Your Investments,” that I have found is extremely helpful for investors to reference when making this very important decision. The following excerpt has been taken from the brochure:
“There are many reasons you might want help with your investments. Perhaps you want to start a college fund for your child. Maybe you are concerned that you are not doing enough to save for retirement. Or maybe you simply feel the need to get your financial house in order.
While some people are comfortable handling their own investments, many are not. They find the idea of creating a plan for allocating their assets bewildering, choosing a mutual fund intimidating, and designing an investment portfolio to be one more thing for which they have neither the time nor the expertise.
This is nothing to be embarrassed about. Investing can be confusing. The good news is there are thousands of people in the financial services industry who can help with financial and investment decisions. Unfortunately, finding the right investment services provider may seem almost as confusing, intimidating, and time-consuming as choosing the right investments.”
While you may think you’re working with an “investment adviser”, you may actually be working with a broker. An example is Edward Jones. Edward Jones falls under the “broker” category, which means that they do not have a fiduciary duty to their customers.
The end of the brochure gives an “Investor Checklist.” The portion regarding questions to ask your Investment Services Provider is particularly helpful when meeting with someone who is or may be handling your money. I’ve provided that section below for your use.
Questions to ask your Investment Services Provider:
- What services do you offer?
- What qualifications do you have to offer those services?
- How do you charge for those services? Do you receive compensation from other sources if you recommend that I buy a particular stock, mutual fund, or bond?
- Would my account be an advisory account or a brokerage account?
- Are you required by law to always act in my best interests? Will you put that commitment in writing?
- What potential conflicts of interest do you have when recommending investment products to me, and will you disclose those conflicts?
- Will you provide me with a written record of any disciplinary history for you and your firm?
- Will you give me your Form ADV (the registration form that must be filed by investment advisers) and/or your Form U4 (the registration form used by persons who work with brokers)?
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John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit https://www.chladekwealth.com.