to evaluate possible financial advisors
Transcript, 2 minutes 50 seconds, for use during week of April
Description: Penny, Ira, and Susan discuss interviewing
financial advisors to find the best fit for their investment
Announcer: Invest Wisely comes to you from Iowa State University
Extension through a grant from the Investor Protection trust,
providing investor education on the web at: investorprotection.org.
Susan: Penny, we talked last time about hiring a financial advisor
and both Ira and I have decided that it's something that, for
different reasons, makes sense for both of us. We've each
given some thought to our objectives.
Ira: We've also each gotten
a list of two or three potential advisors, but we've got some
questions for you about how to choose the right one. Each
of the advisors on our lists has been recommended by people we
know and trust. And each of them
had good reasons for recommending that advisor.
great! It sounds like you've got a good start
on picking a financial advisor who's right for you. The
next step for each of you should be to interview the two or three
potential advisors on your list.
Susan: What questions should
we be asking?
Penny: The advisor's credentials will be one clue.
a real “alphabet soup” of credentials! For example,
there are CFP, or Certified Financial Planner, ChFC, or Chartered
Financial Consultant and CPA/PFS, or Certified Public Accountant,
Personal Financial Specialist. Each indicates someone who
has met specific education, examination and experience requirements.
What about fee structure?
Penny: Some advisors charge a commission
on the products they sell. Some work on a fee-only basis,
while others will charge a combination of fees and commissions.
I'm at a stage where I'd like someone to look at my complete
financial situation, but I know Ira is more interested in focusing
strictly on investments. Should we be looking at different
Penny: You certainly may be. Ask your
potential advisors what kinds of clients they like to work with
and what their investment philosophy is.
Ira: I’d also like
to know if they've had any problems in the past.
Penny: You can
check the background of a firm or individual with the Iowa Insurance
Division at 877-955-1212. They can tell
you if the firm or individual has been disciplined for unlawful
or unethical actions.
Susan: Thank you, Penny. As always
you've been very helpful.
Penny: You're welcome. And remember,
for more information, visit the ISU Extension website at extension.iastate.edu
and look for 'Invest Wisely.