Los Angeles Financial Advisors

Q.  What’s the key to finding the best financial advisors in Los Angeles?

A.  We wish there was a simple answer for you here.  Unfortunately it just requires some hard work.  There is no rating system or other way to find the most competent people.  But here’s some things to check for:

•  Look for someone who has been in business through at least a couple market cycles (more than 15 years).  Otherwise you might be part of someone’s learning curve.  You want to hire someone who has succeeded through all types of markets and economic conditions.
• Financial planning is extremely important to your future, so its best to  hire a CERTIFIED FINANCIAL PLANNER™ professional.  To gain that credential, advisors need to meet strict experience and education requirements as well as pass an exam.
• Many financial advisors make promises about investment returns, but you can’t rely on anything that’s not in writing.  Look for firms who adhere to industry best practices. In this industry, that is GIPS® compliance.  GIPS® stands for Global Investment Performance Standards.  These are worldwide standards maintained by the Chartered Financial Analyst Institute, a worldwide association of investment professionals.  GIPS® results allow to compare apples to apples, and firms that are GIPS® compliant are willing to be transparent on their track record.  To learn more about GIPS® compliance and why its so important for the security of your money, download our Free EBook, “Who’s Watching Your Money?”.
• Always check a prospective financial advisor’s regulatory record before doing business with them.  This record will show you whether the person has had any complaints, penalties, bankruptcies or other potential red flags.  Hire only those with clean records.  When you’re dealing with something as important as your life savings, its just not worth the risk to give someone the benefit of the doubt. Go here to quickly check on advisor’s record: https://brokercheck.finra.org/.

 

Q.  Can’t I just ask my friends and family for recommendations?

A. Most people hire their financial advisors and financial planners this way, but it is not recommended.  Most people don’t understand what to look for.  For example, ask your friends and family if their advisors are fiduciaries, or if they are GIPS compliant and they would likely not even understand the question.  The sad fact is that millions of dollars of advertising is spent to help you create opinions and many of the big brand name financial advisory firms get clients simply because of their image.  Many of these big brand name firms do not act as your legal fiduciary, and most have conflicts of interest.  Their first loyalty is to their shareholders, not to you, and they are often required or incentivized to sell you overpriced mutual funds and other investments that pay them a bigger commission.

Most people are better served by finding a fee-only independent firm that has no corporate advertising or ties to products.  You should look for firms that are committed to using the local cost funds and ETFs to meet your needs.  However  most consumers don’t know to ask these questions or look for these types of advisors, and instead are drawn to the names they know from TV or print advertising.  In the financial industry, it is truly buyer beware.

You can learn more about these issues in this blog article about fee-only financial advisors.

 

Q.  How can I most effectively interview prospective financial advisors and financial planners?

A.  That’s an excellent question.   Most top financial advisors will always offer you an free initial meeting (or phone call or skype call).  That is a great time to see if it’s they are a good fit for you.  You will usually find out quickly if you feel comfortable with this person and their team.  Do they listen ?  The best financial advisors spend more time listening to you than talking.  Since their job is to help you achieve your goals, the focus should always be on you, not on them.

We also recommend you send all prospects some questions by email.  Why? Well first, transparent, honest advisors will understand and appreciate that you want answers in writing.  If someone won’t answer your questions in writing, that is a red flag and we would recommend avoiding them.  Ask them questions such as:  Will you serve as my fiduciary all of the time?  How do you get paid, and do you receive any commissions or other compensation of any kind from any other sources than your clients?  (That’s can help disclose conflicts of interest).  Ask how they will manage risk for you.  Ask about their investing performance track record and if they are GIPS compliant.

Q.  Do I need to hire someone with an office close by where I live in Los Angeles?

A.  With the ability of the internet to keep us connecting, this is not that important for many people. In fact we have many clients that prefer to meet over the phone or on a virtual conference call instead of the hassle of a face to face meeting.  So fortunately, with today’s technology, its not that important.  What’s more important is that you find someone who is knowledgeable about helping people with similar circumstances.

Q.  How can I be sure my money and assets will be kept safe?

A.  The best way is to look for a firm that uses an independent custodian to hold your assets…then make sure that they use a firm that is a household name.  In that case, you simply grant firms like ours permission to manage your investments but not withdraw any money.  This way, you get the security of a well-known custodian holding your physical assets.  Then you get an extra layer of protection.  You’ll also get two sets of statements, one from your advisor and one from the custodian, so you can always double check that everything agrees.  You can learn more about this function in our blog about the importance of an independent custodian.

Q.  What’s a “fiduciary” and what does that do for me?

A.  A fiduciary must legally put your interests in front of theirs at all times.  Not all financial professionals are held to this standard, however; it can vary with their registrations and licenses.  If someone is not a fiduciary, they can recommend investments to you that are suitable, but may be more expensive simply because they pay them a higher commission.  If your advisor is a fiduciary, they may not do that…legally they must always put your interests first.  This is an important distinction.  That why  it’s critical to ask, and get the response in writing.  Learn more about this important topic here.

Please check out our blog for more informative articles on hiring the right Los Angeles financial advisor.