Picking an Adviser
BIG FIRM OR INDEPENDENT?
The biggies may do extensive research, but if you're a small fish, they're likely to give you less personal attention than an independent manager will.
CREDENTIALS
Designations such as CFP, CPA/PFS, ChFC, CFA, CIC, CIMC, and CIMS confer professional credibility. But RIA (for registered investment adviser) means little. The title is obtainable for $150, with no exam in most states.
TRACK RECORD
It's key, but only if you compare apples to apples. Ask how a manager did with a portfolio that resembles yours, or against relevant market indexes.
PERSONAL REFERENCES
Speak to clients in similar financial and life situations about whether they are satisfied with the adviser's performance and service.
DIRTY LAUNDRY
Ask for parts I and II of a money manager's ADV form, which is filed with the SEC and discloses any legal or regulatory problems.
FEES
The common arrangement is 1% to 2% a year of your assets. Avoid managers who earn commissions on products they sell.
DISCRETIONARY POWER
Most managers want full discretion in making changes to your portfolio. If you insist on veto power, make that clear up front.
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