Do you have financial accounts all over the place?

Did you move jobs or even states, and leave behind employer retirement plants? These days, many consumers do. And most people wait until a major life event happens to look for professional advice and guidance.

The question is: “How do you know what to look for to qualify an individual or company for help?”

After all, it’s a large decision that could be difficult to undo.

Here are a five valuable tips for you.

First, do they operate under Fiduciary or Suitability standard?

What does this mean and why should it be important for you? Investment advisors and financial planners tend to operate under two separate rulings for business practices, either under the Fiduciary standard or Suitability standard.

So, what’s the difference?

In short, a simple definition for Fiduciary might be “Is it in your best interest?” and Suitability might be “Can you reasonably afford it?” While these two in many cases may both qualify you for your investment decisions, you may be able to see where there could also potentially be a conflict for your planning.

You may decide to steer towards a Fiduciary that legally has to have your best interests in mind to the best of their knowledge when it comes to such a decision as planning your income for the rest of your life.

Second, are they licensed to give investment advice?

While this may sound like common sense when looking for a comprehensive financial plan, you may be surprised that many of the advertisements you might come across for financial planning are not licensed to give investment advice.

One way to distinguish licensed investment advice …

Is to see if they have a disclosure as all advertisements must legally have one. Usually, it’s the fine print at the bottom of any advertisement. Another way is to check if they may be Insurance licensed only to provide things like life insurance, annuities, and long-term care insurance.

There are many regulations around licensed investment advisors where you would not see things like “Retirement Expert” or client testimonials in their advertisements because it’s not allowed.

Third, ask for the Total Overall Costs

Most consumers have a misconception that their costs might only be a 1% management fee. Many large firms provide mutual fund investments that may have upfront charges that could easily range from 4-6% — that should clearly be disclosed to you.

In addition, investment funds also have what’s called Expense Ratios as an internal charge that can typically range from 0.03 – 1.40%, which is wide scale that could affect your portfolio over decades.

401k plans have multiple fees and charges that consumers aren’t usually aware of. Another investment to look out for in regard to Total Costs are Variable Annuities. While they could be a planning tool for income and accumulation for a portion of your portfolio, many carry a wide range of fees and charges that can range from 2 – 4.5% per year.

Fourth, are they giving you Comprehensive Planning or Investment Advice?

When reviewing financial planning firms, ask yourself, are they simply giving you advice on your investment funds, or are they providing more comprehensive planning for income, taxes, estate planning, business planning, insurance reviews, etc.

We believe it’s not just about what you have — it’s about what you keep!

Your investments can be one thing, but effectively planning for the most amount of tax-efficient income for the rest of your life might be more important to you.

Fifth, ask what’s your plan for the downside?

This is currently a hot topic for consumers when it comes to their investments because it’s been over 12 years since the market was at the bottom of the last recession in 2009. Historically, this is a very long bull run and “buy and hold” investing has not turned out to be very efficient given the last two large recessions in the past couple of decades.

Most advisors in the past several decades have used bond funds in a portfolio to lower the overall risk. The difference in the past 30-40 years versus now is that interest rates are creeping up and bond prices are going down. If you have a portfolio with a large portion of bonds to reduce your risk, you may also be giving up positive returns in the coming years.

Technology today has allowed us to build automated trading models to help protect some of your profits in a correction instead of simply blending more bonds into your portfolio. Thorough research has also presented that uncapped fixed index annuities may be able to provide a better risk-adjusted return than bond funds in the near future.

If you don’t have a plan in place and understand it clearly, you may want to reconsider your planning, so you don’t repeat the past.

Consider these questions to build a good foundation for proper guidance in planning for your family’s financial future and success.

Douglas Marion

Douglas Marion manages Advanced Wealth Strategies. He meets with clients interested in investment management, income planning, and creative insurance services.

Investment Advisory Services offered through AlphaStar Capital Management, LLC., a SEC Registered Investment Adviser. AlphaStar Capital Management, LLC and Advanced Wealth Strategies, Inc. are independent entities. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level or skill or ability. Insurance products and services are offered through Advanced Wealth Strategies by individually licensed and appointed agents in various jurisdictions.

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