Recently a prospective client sent an e-mail with some questions he wanted answered before engaging a financial adviser. I thought others might share these same questions, maybe about me or even other advisers they have. Here, with permission and a few edits, is a copy of our correspondence.
Q: I wanted to learn more about your commitment to Professional Standards. Tell me more about your relationship with professional standards organizations.
A: I am a member of the Financial Planning Association and regulated by the Certified Financial Planner Board of Standards. I serve on the Public Relations Committee for the FPA and have been a past board member. I also participate regularly in their Pro-bono volunteer days. NAPFA is also a good group, but I don’t have time to be a good member in both organizations.
Q: Are you acting as my fiduciary? Will you sign an agreement stating that you are acting as my fiduciary at all times?
A: I do act as a fiduciary for all clients. This means that the advice I give you puts your wellbeing above my business profits. I don’t have a current document that states this, but it is a part of my Certified Financial Planner ethics code.
Q: Do you have a way to measure the value your clients receive in relationship to the fees paid?
A: I do not have a way to measure client results and do not revise fees.
Q: Do you have any affiliation with a broker-dealer? I saw some relationships in the ADV.
A: I am not affiliated with a broker dealer. I do subcontract work for other wealth managers (that’s what you saw in the ADV) and they have broker dealer relationships. Those do not affect me and my business.
Q: Do you use a third-party custodian, such as Charles Schwab, TD Ameritrade of Fidelity to hold my assets?
A: Clients custody assets wherever they wish. I do not actively manage money, only suggest mutual funds or ETFs in which to invest. Where the investments take place is up to the individual client. I generally recommend using discount brokers such as Fidelity, Schwab, TD Ameritrade (soon to be Schwab), E*TRADE, or Vanguard.
Q: Who is your ideal client?
A: Someone who lives within their means naturally and is good at receiving advice.
Q: Do you get additional compensation or financial incentives for recommending certain investments or referring me to an insurance provide, attorney, CPA or other referral?
A: I am only compensated by clients directly at my hourly fee. I get no compensation for referrals to people or investment/insurance products.
Q: Will you be the only person working with me?
A: Yes, I am a one-person firm. That said, if I get hit by a bus, you will need to find someone new, so that may be a factor in your decision.
Q: Do you have clients who might be willing to speak with me about your services?
A: Yes, but only after an initial consultation if you are considering engaging me in a larger project. I do so many new client appointments that I cannot impose on past clients for referrals for all of them.
Q: What counseling to you provide related to Social Security, Medicare, taxes, and estate planning?
A: For Social Security, I use my software program to help determine the best time to take your benefit given your assets, spending, and other sources of income. For Medicare, I refer out to trusted brokers for help with Medigap plans. I am not compensated for the referral or your purchase, but the brokers are. For taxes, I can help with advice as related to how taxes work in your various accounts. I do not do income taxes. Estate planning is also referred to attorneys, but I can give basic ideas on what is essential for you to have and what may be overkill on estate documents.
I hope this written interview helps you to know me better and can serve as a tool for other advisory relationships in your life.