Answers to "The 19 Questions to Ask Your Financial Adviser"

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Sometimes, it takes a jarring event, such as the Equifax hack that resulted in about half of the people in the country having their SSN’s, DOB’s, names, and addresses stolen, to realize that it’s not just what you don’t know that can hurt you. Rather, it’s what you don’t know that you don’t know that can really leave a mark. With so many of us potentially exposed to identity theft through no fault of our own, perhaps it is time to start asking more questions. For example, if you don’t know what ATX Portfolio Advisors® does to protect your privacy, you can read our policy here.

If you are wondering what else you don’t know that you don’t know, Wall Street Journal columnist, Jason Zweig, recently wrote about “THE 19 QUESTIONS TO ASK YOUR FINANCIAL ADVISER”. All of these questions will help you to know your advisor a little better, and possibly learn some things you didn't even think to ask. I've included the questions and my answers to them below:

  1. Are you always a fiduciary, and will you state that in writing? Yes, and I do.
  2. Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services? No.
  3. Do you participate in any sales contests or award programs creating incentives to favor particular vendors? No.
  4. Will you itemize all your fees and expenses in writing? Only when your account balance is higher than the previous month. (Otherwise, there are no fees to itemize).
  5. Are your fees negotiable? Everything is negotiable.
  6. Will you consider charging by the hour or retainer instead of an annual fee based on my assets? We offer three fee-only pricing models, including hourly and retainer.
  7. Can you tell me about your conflicts of interest, orally and in writing? Absolutely. While I strive to minimize conflicts wherever possible, the fact that I am a for profit enterprise inherently presents a conflict that all customers should be aware. However, our Fee-Only (When You’re Up) approach not only offers clients a good value, but it squarely aligns our interests.
  8. Do you earn fees as adviser to a private fund or other investments that you may recommend to clients? Never.
  9. Do you pay referral fees to generate new clients? Never.
  10. Do you focus solely on investment management, or do you also advise on taxes, estates and retirement, budgeting and debt management, and insurance? As a wealth management business, I focus on your particular needs and offer advice accordingly in all of these areas, and more.
  11. Do you earn fees for referring clients to specialists like estate attorneys or insurance agents? Never. Nor do I offer any incentives for professional referrals to ATX Portfolio Advisors®.
  12. What is your investment philosophy? Markets work, focus on evidence-based approaches, keep costs down.
  13. Do you believe in technical analysis or market timing? No.
  14. Do you believe you can beat the market? Not without taking more risk than the market, there is no free lunch. Studies consistently show that the majority of active managers underperform the market. However, I believe that building portfolios that emphasize factors shown through academic research to produce higher expected returns coupled with innovative portfolio management and trading approaches can result in better outcomes than most other approaches.
  15. How often do you trade? Not often. Rebalancing trades occur when accounts drift away from their models by certain tolerances, and occasionally a new strategy will be incorporated if there is academic evidence to support it.
  16. How do you report investment performance? I use a vendor call Blueleaf to send weekly performance information to all clients, and to offer a performance reporting dashboard.
  17. Which professional credentials do you have, and what are their requirements? I am a CFP®, which requires a bachelor’s degree from an accredited college or university, 3 years of full-time personal financial planning experience, completion of a CFP-board registered program, and 30 hours of continuing education every 2 years. Additionally, I am a member of the National Association of Personal Financial Advisors (NAPFA), which requires an additional 30 hours of bi-annual continuing education. I have passed the NASAA Investment Advisers Law Examination (Series 65) and maintain that registration. In the past, I have also held various FINRA and state licenses including The General Securities Representative Qualification (Series 7), The General Securities Sales Supervisor Qualification (Series 9, 10), The Uniform Securities Agent State Law Examination (Series 63), and Texas and California Life Insurance licenses. 
  18. After inflation, taxes and fees, what is a reasonable estimated return on my portfolio over the long term? This depends on your asset allocation, which is determined by understanding your goals and risk tolerance and asset location, as well as your personal tax situation. When doing financial plans, the expected returns I use are more conservative than actual historical returns, while the risk and inflation estimates are more reflective of actual experience.
  19. Who manages your money? I manage all of my personal investments in the same model portfolios that I invest my clients’ money in.

Do you have other questions? Get in touch.