Investment Planning and Execution: How Stable Is the Strategy? Bottom line, how is your adviser managing your money?

  • Does he or she offer a written Investment Policy Statement that documents your personal financial goals and your strategies for achieving them?
  • Is your portfolio structured according to decades of robust evidence indicating how to capture long-term market growth in accordance with your risk tolerances?
  • Is the strategy implemented with efficient, low-cost solutions that make best use of this same evidence?
  • Are your assets being considered as an integrated whole, whether directly under your adviser’s management or held in outside accounts such as your company’s retirement plan?

A comprehensive investment approach that you can consistently apply to your total wealth is core to your adviser’s fiduciary care of your interests, through the years and across various market conditions. Custody Arrangements: Insist on Independence Even if your adviser checks out so far, there’s one more way to protect your interests. After all, Bernie Madoff looked fine on paper before he was exposed as a smooth-talking criminal. In protecting yourself against scoundrels in disguise, it’s essential to ensure that your money is held in your name at a fully independent custodian that reports directly to you. Ensuring your money is held at a separate custodian affords you the opportunity to review separate financial statements for any discrepancies. (Madoff maintained custody of his clients’ accounts at his New York brokerage house, enabling him to falsify their reports.) It also lets you log into your account anytime to keep an ongoing, “trust, but verify” eye on your assets. Finding Your Right-Fitting adviser: Coming Full Circle We circle back to the question we posed at the outset of this series: In selecting or retaining a financial adviser, how do you know if you’re making a wise choice? We hope you’re convinced by now that the first order of business is to review an adviser’s background and ensure that his or her advice will be of the highest, fiduciary standard.. Take advantage of resources such as the adviser’s Form ADV and other legally required disclosure statements that enable more apples-to-apples comparisons. Look for the additional characteristics described above, that best position an adviser to sit on your side of the table. After that, look for someone you get along with on a personal level. If you and your adviser don’t “click,” even good advice will be hard to take, as described by author Seth Godin: “Good advice … is priceless. Not what you want to hear, but what you need to hear. Not imaginary, but practical. Not based on fear, but on possibility. Not designed to make you feel better, designed to make you better. Seek it out and embrace the true friends that care enough to risk sharing it. I'm not sure what takes more guts—giving it or getting it.” To begin your due diligence, we invite you to access our Form ADV  and learn more about Dowling & Yahnke, LLC. We are proud to be a fiduciary, fee-only, Registered Investment adviser firm offering an evidence-based investment strategy guided by your highest financial interests. Together, let’s explore your own financial possibilities.

View other articles in the Due Diligence Series

Doing the Due Diligence on Your Financial Advisor -- Part I: How Do You Know? Doing Due Diligence on Your Financial Advisor Part II: First There Is Fiduciary Doing Due Diligence on Your Financial Advisor Part III: Finding Right-Fitting Advice

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