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(Video) Recognizing Five Star Service from a Financial Advisor

 Jun 16, 2016 2:00 PM

The five star financial advisor

Do you remember former financier Bernie Madoff and his Ponzi scheme? It's considered one of the largest frauds in American history.

Fortunately, the vast majority of investment planners are highly ethical. Although horror stories about rogue financial advisors surface infrequently, it doesn't hurt to ensure you're working with an investment planner who provides outstanding service.

This post explains how you can tell whether you're getting five-star service from a financial advisor. And if you'd rather watch the video, just scroll to the bottom of the post.

A Reputable Financial Advisor Takes Time to Understand You

First, a five-star financial advisor engages you in a discussion about your short- and long-term financial and life goals. If your goals or time horizon are unrealistic, the advisor gives you appropriate feedback and advice.

Second, a professional financial advisor asks about your investment experience. He or she regularly updates information about your financial circumstances and obtains a full understanding of your objectives, risk tolerance and time horizon. They also ensure you understand why they’re collecting this information.

Third, your financial advisor should provide you with specific information about all of your investment costs (including fees and commission payments). He or she will clearly communicate how they calculate fees, along with billing frequency. They should also provide examples to show you the cost of investing and indicate if there are any conflicts of interest between recommended products and the fees they receive.

When you receive five-star service from your financial advisor, you’ll receive investment options and recommendations outlining the benefits, risks, features, and costs of each recommendation. Your advisor will explain how the recommendations help you meet your life goals.

Lastly, stellar financial advice includes a balanced explanation of the relationship between risk and return. Quality advisors use graphics and charts in their explanation. They will also show benchmarks that compare the returns of different financial assets and explain the risks associated with them.

The Bottom Line

In summary, a five-star investment advisor understands you and your goals, collects personal and financial information about you, discusses fees and costs in a transparent way, provides unbiased recommendations, and tells you about the relationship between risk and reward.

 


  

 

 
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