The Added Value of Financial Advisors 
Firm Type
What is a registered investment advisory (RIA) firm?
An RIA acts in a fiduciary capacity. RIAs are required to file a Form ADV with the Securities and Exchange Commission and state securities authorities in the state or states they operate. Among the information Form ADV discloses is how the firm is compensated, the types of services provided and whether any disciplinary action was taken by securities against the firm.
What is the fiduciary standard?
There are 6 core Fiduciary Duties (Institute For The Fiduciary Standard)
- Serve the client’s best interest,
- Act in utmost good faith,
- Act prudently-with the care, skill, and judgment of a professional
- Avoid conflicts of interest,
- Disclose all material facts
- Control investment expenses
Why shouldn’t I use a large firm? Don’t they have greater resources than a smaller firm?
Large or small, it is important to find a firm that fits your goals and objectives. Advances in technology and information have essentially leveled the playing field with regard to resources. Additionally, many large firms don’t adhere to the fiduciary standard and may have sales quotas regarding certain products or services.
Do I even need a firm? There are multiple online investment tools I can use myself.
We suggest that you do your due diligence when investigating online do it yourself investment platforms when comparing them to investment firms. Make a list of what they offer as opposed to working with a team of financial planners and wealth managers with years of experience.
Compensation Model
What types of compensation models are there?
- Fee only: Asset-based, hourly or flat fees. Many financial advisors charge a percentage of the assets they manage in your portfolio. You may pay other fees for execution of the trades your advisor makes and for custody of your assets.
- Fee plus commissions: Some advisors may receive a portion of the commissions you pay when you buy or sell financial products your advisor recommends.
- Commissions only: Sales commissions on investments advisors buy or sell for you. This may give advisor incentive to recommend that you buy and sell more often.
- Wrap fees: A single asset-based fee for both the advice they provide and the execution of the trades they make.
Investment Strategy
What does the firm client relationship look like?
Understand the firm’s expectations for its clients and firmly establish your expectations regarding how you want to work with a firm.
What is the investment approach and philosophy of the firm?
Discuss with the firm how they approach wealth management and financial planning. Alignment between your beliefs and the firm’s is critical to a relationship based on trust.
The Team
What are the professional credentials of the team?
There is a virtual alphabet soup of credentials for advisors. A sampling includes:
Who owns your firm?
Investors should be comfortable with the individuals who are driving the firm.
What are 10 question to ask of a potential advisor?
The Certified Financial Planning Board has published ten questions to ask before establishing a relationship with a financial planner. Click here for the questions, what to listen for when an advisor answers, and how Melone Private Wealth has responded to the questions.
What are 7 key traits your financial advisor should have?
The Certified Financial Planning Board has published seven key traits you should expect your financial planner to have. Click here to learn more about these traits.