Financial Abundance

A recent Wall Street Journal article quoted a survey from Prince & Associates showing that “81% of investors, with $1 million or more in investible assets, plan to take money away from their current financial adviser.” Regardless of the amount of your investible assets, you may be considering whether you need a financial adviser or, if you already have a financial adviser, whether you should fire your current adviser and find a new one.

If you have an interest in finances and are willing to invest the time to learn how to comprehensively mange your personal finances, you may require no professional help. If this describes you, learn about the full spectrum of financial planning including tax minimization, risk management, retirement planning, estate planning and of course, investing. I wrote Financial Abundance Guide to help this you identify detailed strategies on how to comprehensively manage your financial resources and secure a prosperous future.

However, when markets are down and the economy is in turmoil, many people begin to question their capability of managing their personal finances. If you have recently felt that you have no idea whether to sell everything or to completely ignore the market and hope that in ten years you will be financially OK, you probably could use professional financial support. If you have concluded that you have neither the time nor interest to manage your personal finances, what kind of financial adviser should you choose?

The first question to consider is what type of financial advice is required. If you only need help in managing your investments, an investment broker or an asset manager may fit your needs. Be sure to determine exactly how the adviser will be compensated before you entrust them with any funds. The following are three types of investment advisers:

1. Commissioned based advisers typically sell both insurance based financial products and load mutual funds. They will often state that their financial planning services are “free” and that you will pay no commissions, as long as you hold the products sold for a period of five years or more.

2. With “fee based” brokerage advisors you pay an annual fee, based on a percentage of the assets in your account. For this fee, you usually may make unlimited trades without paying any brokerage commissions. However, these brokers often collect commissions on mutual funds (such as the 12-b1 annual load) and on other proprietary products as part of their compensation.

3. Fee only asset managers provide professional asset management and offer only products and services with no commissions. Their compensation is based entirely on an annual percentage of the assets that you place with them to manage.

Most investment management firms will offer some financial planning services. However, since they are compensated through the assets that they are managing, they are often not interested in providing comprehensive financial advice to their clients.

Many people require more financial support than just investment management. These clients require comprehensive financial planning to help plan for their children’s educational expenses, prepare for retirement, identify methods of minimizing taxes and financial risks while maximizing their cash flow and their investment income.

If you need more comprehensive help in planning your personal finances, find a fee only, Certified Financial Planner (CFP®) who provides comprehensive financial planning services. A CFP® will have completed extensive financial planning educational training and met both the experience and ethics requirements of the CFP Board of Standards.

Whether you only need investment advice or require a complete analysis of your current financial situation, be sure that your adviser can provide financial strategies that meet your risk profile. Also, be sure that their compensation offers no conflict with your best interests.

If you currently have a financial adviser who is not actively advising you on how to meet your financial goals, you may want to join the 81% of wealthy investors that plan to take money away from their present advisers. If your investment adviser or financial planner is not treating your financial future in the same manner in which they are treating their own, find a financial adviser who will!