Phoenix Financial

Click image for free PDF guide.

Click image for free PDF guide.

Consumer Due-Diligence Questions - II

Consumer Due-Diligence Questions - I

Selecting an Advisor

As I mentioned on the previous page, selecting a true professional within the industry can be daunting, no doubt.

Over the years, I've watched many consumers gravitate towards  larger firms.  People sometimes take comfort in that.  However, if you were to research the number of scandals that have taken place in recent history, you'll find that a large percentage of those originate there.

Likewise, the media (both local & national) frequently reports on what seems like an equally large number originating from small boutiques, as was the case with the Bernie Madoff scandal just a few years ago.

So how do you really choose?  What sort of questions should we ask?  These are the sort of questions I'm asked each and every month I teach my financial literacy seminars.

To help answer those questions, I devised a series of questions a couple of years back.  They're not product-based.  I thought it would make more sense if the questions were broader and less focused on a particular product and more on the broader concept of markets & economics.  Anyone can memorize a mutual funds' 3 & 5 year returns.  That's easy.  Being able to explain why as well as their connection to the global environment, that's the tricky part.

Any individual that's positioning him/herself as a true financial professional should be able to easily answer the vast majority.  Anything else, and I would consider that cause for concern.

Alternatively, ask questions about the advisor him/herself.  Lots of them.

This is your money.  Never be afraid to ask the pointed questions.  We work for you.  Always remember that.

For example, what sort of Designations do they hold?

This can be a bit misleading as I've met dozens over the years who held one designation or another and quite honestly, couldn't manage their way out of a paper bag.

That being said, ask:

How does their day begin?

What's their routine both before & after market hours?

What sort of economic reports do they follow?

These, as well as a small handful of additional questions designed to give you a better sense of that individuals model & mind-set, can be found to the right.  

As with the questionnaire to the left, any individual that's positioning him/herself as a true financial professional should be more than willing to not only share this information, but be able to quantify it as well.  Anything less, and I would consider that cause for concern.

** Phoenix Financial, is a former RIA (Registered Investment Advisory) firm with the Commonwealth of Massachusetts.

Presently structured as a Sole Proprietorship with the Commonwealth, the firm is in the process of restructuring as a Limited Liability Corporation.