Tony Robbins (life coach, entrepreneur, and author of MONEY: Master the Game) has seven questions you must ask a Financial Adviser you're considering working with. To save you the effort of asking, I've answered them for you here. Tony's main concerns are with accounts being charged based on commission, and the advisor looking to make lots of sales (instead of working in the clients' best interest). The majority of my clients work in the advisor single fee system, which allows me to focus on serving their needs.
1. Are you a Registered Investment Advisor (RIA)?
Yes; in fact, I am dually registered. Tony’s concern here is RIA’s work being fee-based; they don’t receive commissions. The problem with this is you end up paying twice: once for the advice, plus a commission to the online investment company for buying investments. Instead, I work on a single fee advisory account, which includes transaction and advisory costs. In many cases, it also gives my clients access to lower-expense advisor class mutual funds. What does this mean for you? One clear, transparent cost billed quarterly.
2. Are you or your firm affiliated with a Broker-Dealer?
Yes; LPL Financial, which has over $600 billion under management. LPL Financial is independent and provides access to a huge variety of investments. Tony is concerned about a commission-based business that is not advisory. Since I work in the best interest of my clients and provide the account type that suits them, 90% of my clients' accounts are advisory fee based (not commission).
3. Does your firm offer proprietary mutual funds or separately managed accounts?
The company does not offer proprietary funds. They do offer separately managed funds, but it has never been in my clients' best financial interest to use them.
4. Do you or your firm receive any third-party compensation for recommending particular investments?
No; this would work against my moral values. I need to sleep at night. I have never been offered nor accepted any compensation on this basis.
5. What is your philosophy when it comes to investing?
To me, investing is all about the client: their family and their business. I work very closely with my clients — probably more so than many other financial advisors. I like to get to know what is going on in their lives to help them plan for the future. If they are a family, then it helps me to know that the kids will need college funds, a second home purchase is on the horizon, or they're going through job loss and need to finance short-term living expenses in the smartest possible way. Some clients have ongoing medical issues for themselves or their children. We work together to plan their financial future, and that includes everyone. I will meet with the parents separately or together; I will meet with kids and provide them with financial education appropriate for their age group. As for the actual investments: the risk and reward must match their ultimate goal for the use of this money, whether that is short- or long-term.
6. What financial planning services do you offer beyond investment strategy and portfolio management?
I offer a holistic approach to financial needs including life insurance and financial education. I also have access to tax advisors and Trust lawyers who specialize in all different aspects of my clients' financial life. I am not a jack of all trades who gives a little tax advice here, a little business advice there, and does a little estate planning on the side. I prefer to form a team of specialists I can go to depending on my clients' needs.
7. Where will my money be held?
I am not Bernie Madoff, so you would never write me a check. Your funds are held in a custodial account at LPL Financial alongside $600 billion of other custodial accounts. As a custodian, LPL Financial provides a platform for you to access the financial markets, but keeps you in control.
“Price is what you pay. Value is what you get.”