Is Your Adviser “Agnostic?”
The word “agnostic” often refers to a person who is skeptical about God’s existence or humanity’s ability to understand Him, but it can also be used to describe someone who is doubtful or noncommittal in other ways. During a recent interview with a financial adviser on my weekday Real Money radio show, my guest referred to herself as a “product agnostic.” That means she has no preference or bias for any particular product, investment, or company when creating retirement income plans for her clients. I liked that terminology – and it occurred to me that it would be logical and helpful to ask, “Should you expect neutrality from your financial adviser?”
Preempted: Not every adviser is permitted to embrace financial agnosticism. Advisers employed by brokerage firms and insurance companies are limited as to which products they can recommend. Don’t be surprised if you go to a brokerage firm and they sell you their own proprietary brand of mutual funds (just like a Ford dealership will only recommend a Ford). Let’s be honest . . . neither is happenstance. I’ve got nothing personal against brokers or insurance agents, and I have found many to be fine people; however, you do need to know that their flexibility and choices can be hampered by their employer.
How to Know: There is only one way to learn, and discern, if an adviser is agnostic about their investment choices . . . you must ask questions. For example, prospective clients have asked me, “What makes you different from other advisers?” This is a fantastic question that everyone should ask. My answers include: 1. we are an independent firm not owned or controlled by a bank, brokerage firm or insurance company; 2. we enjoy a great deal of latitude when screening and recommending products or services for our clients (which might include a combination of mutual funds, stocks, bonds, preferred stocks, ETFs, REITs, annuities, and other investments); 3. our Ormond Beach investment team manages clients’ accounts in-house (in other words, some anonymous person – or worse, “robot,” – in another state doesn’t do it); 4. we charge fees instead of commissions for our investment advice; 5. with two CPAs on staff, we don’t shy away from tax questions, because we prepare tax returns!; and 6. sixteen professionals assist me in delivering our services.
I’ve had many investors tell me they wish they had asked more questions before choosing their previous adviser, but were unsure of what to ask. Do you know which questions will give you the insight you need to choose wisely? Conveniently, I’ve written a book to help: How to Get Great Advice & Avoid Financial Scams. You can purchase it for $10 by calling my office, or I’ll give you a free copy when we meet to discuss your financial goals.
David D. Holland, a CERTIFIED FINANCIAL PLANNER™ practitioner, hosts a weekday radio show at 9AM on AM1380 Ormond Beach, AM1230 New Smyrna Beach and AM1490 Deland. He has also authored two books in his Confessions of a Financial Planner series. Holland offers investment advice through Holland Advisory Services, Inc., a registered investment adviser in Ormond Beach. He can be contacted at (386) 671-7526. Email your financial questions to info@DavidHolland.com.