Your SlideShare is downloading. ×
0
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Always Be Careful When Choosing a Financial Planner
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Always Be Careful When Choosing a Financial Planner

323

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
323
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
9
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. STATE OF CONNECTICUT DEPARTMENT OF BANKING INVESTOR EDUCATION SERIES
  • 2. Always Be Careful When Choosing a Financial Planner
  • 3. A is for Advice
    • What kind do you need?
    • Examples: Securities, Taxes, Estate Planning, Insurance
    • Planners giving advice on securities for compensation must be registered with
    • the State of Connecticut Dept. of
    • Banking or the SEC
  • 4. B is for Background Check
    • Find out if the planner has any disciplinary history (lawsuits; regulatory actions)
    • You can do an online check, or we will send or e-mail you the information
    • We do not tip off the planner that you
    • are asking for information
  • 5. C is for Conflicts of Interest
    • Planners must tell you about any conflicts of interest that prevent them from giving you unbiased advice
    • Example: Planner also works for a brokerage firm and gets commissions
    • for securities product sales
  • 6. D is for Disclosure
    • By law, investment advisers must give you a disclosure document (“brochure”) describing their compensation, background, investment strategies, services and areas of expertise
    • You should receive the brochure prior to, or when you sign the contract (you have 5 days to cancel the contract if you get the brochure at the time of contract signing)
  • 7. E is for Experience
    • How long has the planner been giving investment advice?
    • Does the planner have experience in
    • your area of interest?
    • What is the planner’s work history?
  • 8. F is for Fees
    • There is no such thing as a free lunch
    • (that mailed “dinner seminar invitation”
    • notwithstanding!)
  • 9. Fee Only Planners
    • Only get paid for giving advice
    • Does not matter if you follow the advice
    • and buy a securities product
    • Usually an hourly charge or by project
  • 10. Commissions
    • Paid to a securities product seller (like
    • a broker-dealer) for buying or selling
    • securities
    • Decrease your total investment
    • Planners can get commissions if they
    • are also associated with a brokerage firm
  • 11. Fees and Commissions
    • Planner receives both
    • Also called “fee based” or “fee offset”
    • Watch out for other fees (initial consultation fee; follow-up review fee)
  • 12. Wrap Fees
    • You get a bundled set of investment services (brokerage; advice) for a set fee
    • Planner may get a portion of the wrap fee you pay to the product sponsor
  • 13. G is for Guaranteed Profits
    • If your planner guarantees profits
    • RUN TO THE NEAREST EXIT!
  • 14. H is for High Return/No Risk
    • If you planner tells you a product
    • has no risk and high returns
    • HE’S LYING
  • 15. I is for Industry Designations
    • Show that the planner is pursuing
    • continuing education in her field
    • But beware of titles suggesting a
    • specialty in seniors’ affairs
  • 16. Common Designations
    • CFP (Certified Financial Planner)
    • ChFC (Chartered Financial Consultant –
    • insurance)
    • PFS (Personal Financial Specialist –
    • CPAs)
    • CFA (Chartered Financial Analyst –
    • securities)
  • 17. R.I.A.
    • Stands for Registered Investment Adviser
    • Not an industry conferred designation
    • Just because an adviser is registered
    • with Connecticut (or with the SEC) does not mean that the government has given him its stamp of approval
  • 18. J is for Jawboning
    • Beware of planners who brag about their past performance
    • Unscrupulous planners prey on your greed, reluctance to object, guilt, unwillingness to look dumb, etc.
  • 19. K is for Know Your Client
    • By law, investment advisers have a fiduciary duty to recommend products
    • that align with your financial goals and
    • risk tolerance
  • 20. L is for Liquidity
    • Tell your planner if you need ready access to funds (e.g. to pay bills)
    • If you need to access your funds, long-
    • term or locked up investments are not
    • for you
  • 21. M is for Multiple Hats
    • Your planner must tell you if she is working for multiple firms (e.g. selling securities products for a brokerage firm)
    • It is not uncommon for brokerage firms to set up shop in banks – looks aren’t everything!
  • 22. N is for Number of Clients
    • Ask the planner how many clients he has, and whether he only services high-
    • income clients
    • Beware if his only experience is managing his own securities portfolio
  • 23. O is For One Size Fits All Plans
    • Ask to see a sample of financial plans
    • the financial planner has prepared
    • Beware if the plans look the same –
    • or recommend the same product(s)
  • 24. P is For Personal Attention
    • Ask the planner whether she (or an
    • assistant) will be working with you
    • If you’ll be working with an assistant, do the same background check and homework on the assistant that you’d do on the financial planner
  • 25. Q is for Question
    • Ask the planner as many questions
    • as you want – after all, he’ll be working
    • for YOU
  • 26. R is for Risk Assessment
    • Before you meet with the planner,
    • think about how much investment risk
    • you are able to bear
  • 27. S is for Schooling (and Services)
    • Did the planner graduate from the Wharton School of Business – or the
    • local academy of hair design?
    • Nail down the planner on precisely what services he will provide
  • 28. T is for Take Your Time
    • You don’t have to follow the planner’s recommendations right away
    • If the planner pressures you to buy
    • a particular product, be wary.
  • 29. U is for Understand the Strategies
    • Beware of the “Einstein Effect” – the planner telling you that the investment strategy is so complicated, only he understands it
  • 30. V is for Variety
    • Interview several planners before
    • deciding on one
  • 31. W is for Writing (Get it in)
    • Ask for a copy of the adviser’s
    • brochure – and read it beforehand
    • Review the advisory contract before
    • you sign it
  • 32. X is for X Marks the Spot
    • Don’t give the adviser discretion –
    • the ability to trade securities for you
    • without your permission – without
    • granting that authority in writing and thinking it through
  • 33. Y is for You Are in Control
    • Make the Adviser
    • WORK
    • For Your Business
  • 34. Z is for Zero In on Your Finances
    • Familiarize yourself with your financial
    • plan
    • Read your account statements carefully
    • Keep up-to-speed on finance by reading newspapers and periodicals

×