6 Tips for Vetting a Financial Advisor

At  A.G. Campbell Advisory, we believe that selecting a trusted and competent Financial Advisor is a critically important decision and there are questions you should ask and information you should obtain before you engage in a relationship. 

Important Guidelines for Evaluating a Financial Advisor

1. What’s the Advisor’s Track Record With Their Own Money?

Financial Advisors ask Clients to disclose their entire array of assets, but share little information about their own investment practices.  Clients should ask the advisor- ‘exactly how much of your own money do you have invested in stocks and would you show me your statements to prove that number?’  Clients should care because do you really want someone recommending a strategy that they don’t personally adhere too. Alternatively, do you want an advisor investing your money who only invests a nominal amount of their own money in their IRA or 401k?

2. If It Seems To Good To Be True…It Probably Is

There is a popular commercial that says, “at XYZ company, we only make money when you make money.” They claim independence which is true and give you this “good guy” image of just being on your side. The implication in the advertisement is that they don’t get paid at all if you don’t make money. This simply is not correct. Here’s the deception: they do make money when you make money. However, if your account is down in value at quarterly billing time, they still bill the account. They just make less.

3. Avoid Get Rich Quick Schemes

Beware of advertisements that tout trading platforms that can make you tons of money for simply signing up. Think about it: no one would do this. They have a profit motive and that revenue target is from you. The fees and costs will come later. Just based on common sense, if I owned a trading platform like this, why would I ever tell anyone? That doesn’t mean legitimate money managers aren’t valuable because they are. Simply put, avoid get rich quick schemes.

4. Do Your Due Diligence 

Check out your advisor on FINRA’s website, Broker Check. This is just one method of making sure that your advisor is reputable and doesn’t have a history of complaints against them. You don’t want to be the next unwitting buyer. Also, it is much better to be referred to an advisor from a friend you trust. (FINRA.org)

5. Is Proprietary Money Management In Your Best Interest? 

If you are offered proprietary money management, you should run for the exit. For example, an advisor from XYZ company wants you to by the XYZ growth mutual fund. Are you really going to tell me that Vanguard, Fidelity, or Schwab can’t match the performance with far less expense to the client? Baloney. In many proprietary situations, the company or the sales agent is being paid more money to sell it. Additionally, if your money management firm has a publicly-traded stock price, you are not the priority. The stock price is. Therefore, most of the strategies within those companies are geared to influence the bottom line of the company and raise the stock price. Chances are you would be so much better off to own their stock and deal with a private investment company.

6. Is Your Broker A True Fiduciary? 

Last but not least, it would generally serve you better to deal with a fiduciary rather than a broker. The Security and Exchange Commission defines a fiduciary as someone who is acting and held to a higher standard of conduct than registered representatives. Please don’t misunderstand me, there are plenty of unethical fiduciaries out there; therefore, a referral from a friend, accountant, or attorney is invaluable. The best situation for a client is to be with the most ethical and intelligent advisor that has the least conflicts of interest. If you find this person, your odds of success are immediately increased. 

A.G. Campbell Advisory, LLC

A.G. Campbell Advisory, LLC is an independent investment advisory firm with offices in Baltimore, Maryland and Naples, Florida, offering individuals and institutions custom investment advice, financial planning and family office services.  A.G. Campbell was founded in 2012 by veteran industry professionals to address the need for a high-quality firm where clients have access to the resources of a large firm, without the inflexibility and conflicts of interest inherent in a larger financial institution.  The principal objective of A.G. Campbell is to advise our clients on how to grow and preserve their wealth for themselves and for their families.  Our client’s best interests are of paramount importance and the foundation of our work.