Getting Started in Finding a Financial Advisor

275 Pages·2010·4.12 MB·English

by  Charles A. Jaffe

Personal Finance/Investing
JAFFE G E T T I N G S TA R T E D I N
A PRACTICAL GUIDE TO
FINDING TRUSTWORTHY FINANCIAL ASSISTANCE F I N D I N G A
GETTING STARTED IN
FINANCIAL ADVISOR
FINDING A
G
FINANCIAL
E
T
T
Given the events of the past two years—from bankruptcies to fi nancial scams—it’s more I
N
important than ever that investors understand who they are hiring to handle their fi nances. G

S
T
G etting Started in Finding a Financial Advisor explores the important relationship between an A
R
investor and their fi nancial advisor and examines how you should go about fi nding potential T
E
candidates. Page by page, it shows you how to interview and check the credentials of seven D
ADVISOR
I
key types of advisors, so that you can spot and avoid rogues, scam artists, and incompetents. N
Along the way, you’ll also learn how to understand what can happen if the institution or
F
advisor you’re with ends up in fi nancial or legal diffi culty. Engaging and informative, this I
N
timely guide:
D
(cid:129) Helps you determine the kind of advisor best-suited for your situation
I
N
(cid:129) Explains in detail the issue of fi duciary responsibility of fi nancial advisors, so you can fi nd solid
G
professionals who are on your side

A
(cid:129) Provides essential interview questions, discusses what credentials really mean, and which are important

(cid:129) And much more F
I
N
Most people who give advice about money are trusted without actually having earned that
trust. Getting Started in Finding a Financial Advisor helps you set the highest standards, A
allowing you to locate professionals who can be trusted to protect your fi nancial well-being N
and help you prosper. C
I
A
CHUCK JAFFE is a Senior Columnist for MarketWatch. His work is syndicated nationally
L
to an audience of more than twenty million readers per week, with his “Your Funds” column

being the most widely read feature on mutual fund investing in America. Upon joining A
MarketWatch in 2003, Jaffe created the “Stupid Investment of the Week” column, a quirky D
feature that highlights the fl aws that make for bad investments. In addition to MarketWatch, V
Jaffe provides regular guest commentary for Nightly Business Report on public television and I
S
for All Things Considered on National Public Radio.
O
R
Cover Design: Paul McCarthy
Cover Illustration: © iStockphoto
$19.95 USA / $23.95 CAN
CHUCK JAFFE
SENIOR COLUMNIST, MARKETWATCH
Jaffe_FM.qxd 2/24/10 9:09 PM Page vi
Jaffe_FM.qxd 2/24/10 9:09 PM Page i
Getting Started in
FINDING A FINANCIAL
ADVISOR
Jaffe_FM.qxd 2/24/10 9:09 PM Page ii
Books in the Getting Started In Series
Getting Started In Online Day Trading by Kassandra Bentley
Getting Started In Asset Allocation by Bill Bresnan and Eric P. Gelb
Getting Started In Online Investing by David L. Brown and Kassandra Bentley
Getting Started In Investment Clubs by Marsha Bertrand
Getting Started In Internet Auctionsby Alan Elliott
Getting Started In Stocks by Alvin D. Hall
Getting Started In Mutual Funds by Alvin D. Hall
Getting Started In Estate Planningby Kerry Hannon
Getting Started In Online Personal Financeby Brad Hill
Getting Started In 401(k) Investing by Paul Katzeff
Getting Started In Internet Investingby Paul Katzeff
Getting Started In Security Analysis by Peter J. Klein
Getting Started In Global Investing by Robert P. Kreitler
Getting Started In Futures, Fifth Edition by Todd Lofton
Getting Started In Financial Informationby Daniel Moreau and Tracey Longo
Getting Started In Emerging Marketsby Christopher Poillon
Getting Started In Technical Analysis by Jack D. Schwager
Getting Started In Real Estate Investing by Michael C. Thomsett and Jean Freestone
Getting Started In Tax-Savvy Investingby Andrew Westham and Don Korn
Getting Started In Annuities by Gordon M. Williamson
Getting Started In Bonds, Second Edition by Sharon Saltzgiver Wright
Getting Started In Retirement Planningby Ronald M. Yolles and Murray Yolles
Getting Started In Online Brokersby Kristine DeForge
Getting Started In Project Managementby Paula Martin and Karen Tate
Getting Started In Six Sigmaby Michael C. Thomsett
Getting Started In Rental Incomeby Michael C. Thomsett
Getting Started In REITs by Richard Imperiale
Getting Started In Property Flippingby Michael C. Thomsett
Getting Started In Fundamental Analysisby Michael C. Thomsett
Getting Started In Hedge Funds, Second Editionby Daniel A. Strachman
Getting Started In Chart Patternsby Thomas N. Bulkowski
Getting Started In ETFs by Todd K. Lofton
Getting Started In Swing Tradingby Michael C. Thomsett
Getting Started In Options, Seventh Editionby Michael C. Thomsett
Getting Started In a Financially Secure Retirementby Henry Hebeler
Getting Started In Candlestick Chartingby Tina Logan
Getting Started In Forex Trading Strategiesby Michael D. Archer
Getting Started In Value Investingby Charles Mizrahi
Getting Started In Currency Trading, Second Editionby Michael D. Archer
Getting Started In Options,Eighth Edition by Michael C. Thomsett
Getting Started In Rebuilding Your 401(k) Account, Second Edition by Paul Katzeff
Getting Started In Finding a Financial Advisorby Chuck Jaffe
ffirst.qxd 3/2/10 4:29 PM Page iii
Getting Started in
FINDING A FINANCIAL
ADVISOR
Chuck Jaffe
John Wiley & Sons, Inc.
Jaffe_FM.qxd 2/24/10 9:09 PM Page iv
Copyright © 2010 by Chuck Jaffe. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by
any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted
under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written
permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the
Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone],
fax [phone], or on the web at www.copyright.com. Requests to the Publisher for permission should
be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ
07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in
preparing this book, they make no representations or warranties with respect to the accuracy or completeness
of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness
fora particular purpose. No warranty may be created or extended by sales representatives or written sales
materials. The advice and strategies contained herein may not be suitable for your situation. You should
consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss
ofprofit or any other commercial damages, including but not limited to special, incidental, consequential,
orother damages.
For general information on our other products and services or for technical support, please contact our
Customer Care Department within the United States at [phone], outside the United States at
[phone] or fax [phone].
Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may
notbe available in electronic books. For more information about Wiley products, visit our web site at
www.wiley.com.
Library of Congress Cataloging-in-Publication Data:
Jaffe, Charles A.
Getting started in finding a financial advisor / Charles A. Jaffe.
p. cm. — (Getting started in series)
Includes index.
ISBN 978-0-470-53878-4 (pbk.)
1. Financial planners. 2. Investment advisors. 3. Finance, Personal. 4. Financial planning industry.
I. Title.
HG179.5.J338 2010
332.024—dc22
2009049439
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
Jaffe_FM.qxd 2/24/10 9:09 PM Page v
For my girls—Susan, Thomson, and Whitney—who inspire me every
day, and for my biggest fans, Herb and Evelyn Jaffe.
Jaffe_FM.qxd 2/24/10 9:09 PM Page vi
ftoc.qxd 3/2/10 8:46 PM Page vii
Contents
Acknowledgments ix
Introduction 1
PART I
A SOUP-TO-NUTS GUIDE TO SELECTING
YOUR ADVISOR
Chapter 1
You Need Financial Help.Now What? 5
Chapter 2
You Get What You Pay for,and Pay for What You Get 15
Chapter 3
The Seven Big Mistakes People Make When Hiring Advisors 25
Chapter 4
Why You May Be the Only One You Can Trust 39
Chapter 5
Swimming through Alphabet Soup 45
PART II
SELECTING, INTERVIEWING, AND GETTING
RID OF YOUR ADVISOR
Chapter 6
Your First Meeting with an Advisor 59
vii
ftoc.qxd 3/2/10 8:46 PM Page viii
viii CONTENTS
Chapter 7
Interviewing a Financial Planner 71
Chapter 8
Interviewing a Broker 101
Chapter 9
Interviewing a Money Manager 131
Chapter 10
Interviewing an Insurance Agent 147
Chapter 11
Interviewing an Accountant/Tax Preparer 167
Chapter 12
Interviewing a Lawyer 189
Chapter 13
Interviewing a Real Estate Agent 209
Chapter 14
Get What You Need from References and Referrals 235
Chapter 15
Breaking Up Is Hard to Do 249
The Last Word 257
Index 259