In this turbulent investment environment, I want the most effective and reliable advisor representing my interests. My financial advisor is a nice guy. He sends out material. He returns my calls. He remembers my kids' names. He sends a holiday card. Some of his advice has been terrific and some... well, not so great. But I can live with that. Nobody's perfect, especially not in today's stormy markets. But frankly, my financial advisor could do better, a lot better. I don't mean better returns, nice though that would be. I mean customer service, bedside manner, call it what you will, but basically it's making me feel valued. I have a few simple suggestions, none of them hard to do. I have some advice for the advisor. Seriously, maybe he should be paying me.
1. Don't get in touch with me only when you have something to sell or when things are so bad that you're worried I may throw in the towel. Call me for a ten minute review once a quarter. Give me a quick update and ask if my broad objectives remain the same.
2. Do discuss taxes with me. Sometimes it seems like my advisor lives in a utopia where taxes haven't been invented. News flash: I pay taxes. I care about paying as little as is honestly possible, about being efficient with my transactions. When you pitch some fund, don't just tell me about the pre-tax returns, but talk about the tax efficiency. I know it gets complex, but it's too important to ignore.
3. Don't gloss over fees and loads and sales charges. You don't need to feel embarrassed about them, I know you have private school fees and alimony to pay, but it makes me mad when I suspect you're skirting around the fee part of the story. Come clean.
4. Do discuss performance with me relative to benchmarks. I am sophisticated enough to know that this is the acid test of having someone manage my money. I care about my absolute returns, sure, but I also care about relative performance.
5. Don't gloss over or spin bad news. Nothing makes me more angry than the phrase "good ideas at the time." Let's call a dog a dog. Like I said before, I don't expect you to be perfect. What I want is to pay somebody who learns from mistakes and as a result makes fewer of them over time.
Managing Risk
6. Do talk more about risk. Make it real for me. Say things like: "if rates go up by one percent, then the price of this bond fund would likely drop by maybe five percent" or "if this stock misses its earnings, it could halve." Let's be super-clear about what the possible bad things are. Assume that I don't read the prospectus. This data I need you to tell me.
7. Don't expect to buy me off with tickets to ballgames. I like ballgames but I don't want or need freebies from you. Frankly, they make me think something's wrong, or I'm paying you too much. (Which I almost certainly am.)
Asset Allocation
8. Do check on my overall goals and objectives every year. I'm not going to remember to do this so I want you to initiate the conversation. How can you expect to be smart about my asset allocation if you don't know if my personal situation has changed. Ask me about my other investments too. A confession: I don't keep all my assets with you, so guess what... your asset allocation for me isn't my true allocation.
9. Don't over-sell me on your proprietary investments. You know, these are the ones where you guys make huge fees and I'm locked in to your company because I could never transfer my investment to another account. I'm happy to look at these fancy funds, but I want the best ideas from anywhere, not just your firm's products.
10. Do give me alternatives. It's not that helpful when you call and say "we've got this great new Fund." Much better is when you have two or three options that offer me different risks, exposures and rewards. We all know there are many financial investment products out there. Don't just offer me the one in your shop window that the Sales team is flogging. A manageable amount of choice would be much appreciated.
