How to Make Sure Your Business Manager is Watching Your Investment Advisor
It’s common for your personal financial management and your business to overlap. After all, your business is what fuels your bottom line. In order to protect your assets, it’s important that your business manager monitors your financial advisor’s activities and communicates any issues with you.
Choosing a financial advisor is a big step in any professional’s career, so the decision shouldn’t be taken lightly. Even after you’ve selected someone to provide financial advice, you and your managerial employees need to watch for signs that point to dishonesty. While these types of relationships are based on trust, blind faith can lead to problems if you’re not careful.
Read on to learn how to avoid common pitfalls associated with personal financial management. Once you understand the signs to look for, you can better communicate with your business manager so everyone’s on the same page. If you already have a financial advisor, it never hurts to educate yourself so you can catch any signs of fraudulent activity early.
Warning Signs
In order to make sure your business manager is watching your financial advisor closely, you need to be aware of any red flags that might signify dishonesty. If you don’t have experience with multiple financial advisors, you may not realize that the person helping with your professional and personal financial management isn’t as helpful as you might have assumed.
Watch for Overly Technical Language
A good financial advisor should be able to simplify complex ideas. If you feel confused after discussing financial issues, it may be time to look for a new financial advisor. When a financial advisor is being deceptive, masking their activities with complicated, overly technical language is a common tactic to keep you in the dark.
Look for Communication
Beyond just seeking simplification, when choosing a financial advisor (or monitoring your current advisor), it’s important that you pay attention to how they communicate details. For example, your financial advisor should make it clear exactly how often you’ll be hearing about your financial status from them. They should tell you about any changes immediately.
Your financial advisor should also explain exactly what financial services they provide. To put it simply, you should always know what you’re paying for. You want concrete details, not vague explanations.
Avoid Conflicts of Interest
You should also know the background of whoever is handling your professional and personal financial management. Where do they work? Do they have other clients? It’s crucial that your financial advisor is able to offer unbiased advice, and if there’s a conflict of interest, they may not be providing the best possible advice.
Compare Fees
How much is your financial advisor charging you, and are they worth what they charge? Some financial advisors are worth paying a premium, but your financial standing should reflect that.
You or your business manager may want to request a quote from other local financial advisors to see what they’re charging. That way you can see if the person in charge of your professional and personal financial management is actually charging you a fair price. Beyond just cutting into your bottom line, unfair pricing proves they don’t genuinely have your best interest in mind.
Be Wary of Salespeople
If your financial advisor is constantly telling you to trust them, you may want to look at them a little closer. A good financial advisor should provide advice that speaks for itself. While you’re certainly going to have to trust them from time to time, if you start to feel like every meeting is a pitch, there may be something going on.
Sometimes choosing a financial advisor means trusting your instincts. If something feels off, it probably is. Don’t just accept the advisor’s word as law. Also, do your own research so you can corroborate what they say. They provide the ideas, but you should be the one who confirms them and puts them into action.
Consider High Turnover Rates
Stability is a big part of business and personal financial management. Is your financial advisor regularly trading in and out of securities?
Unless you’ve specifically requested aggressive investing, too much movement can be a bad sign. It might mean that they don’t really know what they’re doing, or worse, it could mean that they’re recommending stocks based on commission, rather than based on what’s best for you or your business.
Get a Background Check
If anyone in the world deserves a background check, it’s the person who you choose to be in charge of your business and personal financial management. After all, no sensible person would hire a financial advisor with a nefarious past. This is the person who can make or break your career, so be vigilant with collecting details.
Fortunately, there are easy ways to look into the background of your financial advisor. The Securities and Exchange Commission has a convenient online tool you can use, or you can use BrokerCheck. It’s also wise to read online reviews to see what other clients have to say.
Request a Fiduciary Oath
The Committee for the Fiduciary Standard was formed in 2009 to help investors feel confident about choosing a financial advisor who truly has their best interest at heart. Before you choose someone who’s going to be in charge of your professional and personal financial management, it’s prudent to get a fiduciary oath signed in writing.
Fortunately, the committee provides a downloadable fiduciary oath that you can print out. Beyond giving you a signed document to hold onto in case something goes awry, having your financial advisor sign this document shows them that you’re a person who’s aware and vigilant. All too often, the people who are victimized are victimized because they showed vulnerability.
Ask About Payment Structures
Are you paying your financial advisor by the hour? Or do they get a cut of successful investments? Or do you pay a monthly fee to keep them on retainer? Did you choose that payment structure?
The person who handles your business and personal financial management should be very open with how and why they’re compensated. A common mistake is putting someone in charge of your finances and then leaving it at that. You should be aware of where your money is going, even if you trust your advisor.
Additionally, you should be aware of any commission that the advisor receives. Financial advisors also have their own bottom line to look out for, and it’s possible they may recommend mutual funds, insurance, or annuities that grant them commission.
While receiving a commission isn’t necessarily a bad thing, it does make you question whether they’re recommending these things because they truly believe they’re right for you, or simply to boost their paycheck.
When choosing a financial advisor to handle your professional and/or personal financial management, always make sure they clarify how they earn income through you, beyond just what you’re paying them.
Communicate with Your Business Manager
Now that you have a better idea of potential warning signs, the next step is to communicate them to your business manager. Often, a business manager interacts with your financial advisor more than you do so they may be in a position to provide a unique perspective. Make sure that your business manager knows signs to look for, even if they’re subtle.
Of course, you don’t want your financial advisor to feel like they’re not trusted, so keep your discussion with your business manager discreet. At the same time, sometimes being direct and honest with the person in charge of your personal financial management is the best approach. If you suspect dishonest activities, it may be best to bring it up.
Your business manager is there to manage your business, right? That means they should view watching your financial advisor as part of their management duties. Make sure they know that they should be monitoring the advisor’s behavior just like any of the other employees, if not closer.
Hire the Right Financial Advisor Today
If you’re considering choosing a financial advisor, we encourage you to contact our team. You can feel confident trusting us because we’ve proven ourselves time and time again.
Our long list of clients includes high net worth individuals, esports players, entertainers, and much more. These people count on us to handle their professional and personal financial management, and we never let them down.
Beyond our trustworthy reputation, Shahen Derderian & Associates offers a unique approach. We offer the all experience, knowledge, and resources you’d expect from a major firm, but we also provide unparalleled one-on-one services that you just can’t get from larger firms.
If you want to know more about us or request a quote, please don’t hesitate to contact us. We can help you manage your finances and increase your bottom line. The right financial advisor can drastically boost your financial standing, so don’t wait. Get in touch today for all your business and personal financial management needs.