1. Are you a fiduciary 100% of the time, and can I see that promise in writing?
Not all financial advisors owe the same level of commitment to their clients. Some advisors are held to the fiduciary standard, while others are held to the suitability standard.
For financial advisors who work under the fiduciary standard, the law requires them to put the client’s interest ahead of their own interest at all times. For financial advisors who work under the suitability standard, the law only requires them to recommend financial products that are “suitable” for that client’s situation.
This article goes into depth about what a fiduciary financial advisor is, but the main thing to consider is that you would be wise to work with a financial advisor that is a fiduciary 100% of the time.
The important part of that sentence is 100% of the time. Some financial advisors are held to the fiduciary standard when developing a financial plan, but then act under the suitability standard when implementing the financial plan. This means that once the plan is developed, they can implement the plan or allocation in a way that is not in your best interest, for example by choosing investment funds that give incentives or kickbacks to the advisor or the advisor’s firm.
At our firm, we are a fiduciary 100% of the time: when developing your plan, when recommending investments … at all times. We take our fiduciary duty very seriously. We receive no form of compensation, incentives, or kickbacks from any investment company or anyone else; the only fee we receive is the fees we receive from our clients.
Our fiduciary duty is a legal obligation we have chosen to be held to because we believe it is the right thing to do. We place the client’s interest above our own. The investments we use in our client accounts are the same investments we use in our personal accounts and the accounts of our immediate family members.
2. Do you have the knowledge and experience necessary to successfully manage investments and do financial planning?
Many financial advisors lack formal education in finance, which is critical to successfully manage investments and understand complex financial markets.
Jason T. Micheli, PhD has a degree in finance from a top university, and has taken the rigorous steps to become a CERTIFIED FINANCIAL PLANNER™ Professional. Jason began working in the finance industry in 2002 at a large, multi-national wealth management firm.
3. How many clients do you serve and how does their situation compare to mine?
We currently serve approximately 70 families across the United States. We have chosen to limit the size of our practice to ensure every client receives the service they require to achieve their financial goals.
The majority of our clients are retired, or close to it, and their investments range from approximately $100,000 to $3,000,000.
4. How will we communicate?
Our office door is always open, so to speak. Anytime a client wants to discuss their situation or have us walk through their investments, we are happy to do so. We also hold formal reviews with clients 1-2 times annually.
Client education is a priority for our firm. It is important to us that our clients understand as much about our investment process as they want to know.
Each month our clients receive a statement with details regarding the activity and performance of their accounts.
5. What will be my total investment expense, how much will you be compensated, and where can I see this in writing?
As detailed in our client agreement, each quarter we deduct a fee equal to 0.50% (or less) directly from the accounts under our management. This deduction is detailed in the quarterly statement we provide to every client. To put this fee in perspective, most days the stock market moves more than 0.25%.
Many of the investment funds we use have an internal expense of less than 0.10% annually. That expense is almost half the industry average. Some investment funds we use have a higher internal expense. When using funds with higher internal expenses it is because we believe that the performance of that fund justifies the higher expense.
6. Where do you keep my money and how can I see it?
For your convenience and safety, Financial Growth Management, Inc. uses three custodian banks as the custodian for our client assets: Charles Schwab, Axos, and Nationwide. As a custodian, these three firms hold your funds and provides reporting to you and the IRS. Your accounts can be viewed at any time through your client portal.