I love listening to music, all kinds – rock, country, hip-hop and Christian. I’ve never played an instrument but enjoy the collective sound they make to produce wonderful music. My daughter played the bassoon in high school and I had to Google it because I’d never heard of it before in my life. If you’re like me, you gravitate to bands you enjoy listening to and that are pleasing to your ears.
Most bands play similar instruments like guitars, pianos and drums. The instruments U2 plays are not unlike those of the Rolling Stones, Led Zeppelin or Mercy Me. Of course, it’s how they use them that makes all the difference. The guitar was invented in the 16th century and it’s one of the more popular instruments played by millions. It’s debatable who the greatest guitarist is of all-time, but you could add Jimi Hendrix, Chuck Berry, Jeff Beck, Eddie Van Halen, The Edge, and B.B. King to this short list.
Financial advisors, like musicians, have access to similar instruments - stocks, bonds, mutual funds, exchange traded funds, and so on. An index fund purchased from Fidelity is not much different than one bought through Vanguard. Does it matter how shares of Apple, Facebook, or Pepsi are purchased? It probably doesn’t, but what does is how comfortable you are with your advisor because you’ll work with one you like and trust.
In addition to working with an advisor you trust, here are a few suggestions to help you refine your search.
- Is your advisor a Certified Financial Planner practitioner? An advisor who has obtained the CFP® designation has studied for two years, or more, and passed a rigorous exam. He also has an on-going requirement for continuing education. Here’s a link to the CFP website if you want more information: https://www.cfp.net/
- Is your advisor a fiduciary? If so, he must legally act in your best interest and disclose any conflicts of interest as set forth by the Investment Advisors Act of 1940.
- Is your advisor a member of the National Association of Personal Financial Advisors (NAPFA)? Here’s what members of NAPFA believe: “NAPFA members live by three important values: To be the beacon for independent, objective financial advice for individuals and families. To be the champion of financial services delivered in the public interest. To be the standard bearer for the emerging profession of financial planning.” Here’s a link to their website: https://www.napfa.org/
- Is your advisor a member of their local financial planning association? If so, he shows a strong commitment to planning and serving his local community. Here’s a link to the Financial Planning Association website: https://www.onefpa.org/Pages/default.aspx
- How does your advisor invest their money? Does he own what he recommends? Do they eat their own cooking? Are the investments diversified?
- What fees does your advisor charge? Is it based on your assets? Do they offer a flat fee or charge by the hour? More importantly, how much do they charge? The fees should be reasonable and easy to comprehend.
- How often do they communicate with you to review your accounts and goals? Is he accessible to meet with you in person? By phone? Video? Email? Text? Do they return your calls and emails in a timely fashion?
Investment vehicles do not vary much from one firm to the next. The process for financial planning and investment selection is similar from advisor to advisor. What’s the difference? It’s the advisor. If you’re looking for an investment professional to help you manage your financial resources, make sure it’s someone you can rely on because working with one you can trust is beautiful music.
It's easy to play any musical instrument: all you have to do is touch the right key at the right time and the instrument will play itself. ~ Johann Sebastian Bach
Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm in Austin, TX. For more information please visit www.parrottwealth.com.
Note: Past performance is not a guarantee of future returns. Your returns may differ than those posted in this blog and investments aren’t guaranteed.