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Aligning Wealth Management with ESG Values
EP Wealth’s Carrie Sax, CFA, CFP® shares insights on ESG investing, explaining how it adds a layer of due diligence while helping clients align...
No two financial advisors are exactly the same.
As you begin your search for a financial advisor, you’ll quickly find out you have a lot of options. We recommend that you keep these characteristics in mind through your vetting and research process.
When choosing a financial advisor, keep these characteristics in mind:
1. Transparent fee structure
Advisory firms differ in how they calculate their fees. Among other advisory fees may be flat rates or a percent on a sliding scale based on the market value of your assets under management.
Among other advisory fees may be flat rates or a percent on a sliding scale based on the market value of your assets under management.
Some fee-based firms can take commissions on the products they sell—in addition to charging advisory fees to their clients. While many others don’t. Understand and ask the right questions. How is your advisor getting paid and does that create a conflict of interest? Is that interest disclosed? Is the fee a wrap fee that bundles advice, commissions on products and trade costs?
Other financial advisor fees and pricing models:
- Hourly billing: When firms bill by the hour, you pay your advisor based on the amount of time they spend researching, analyzing, and making recommendations for your accounts. This measure of work may not reflect the quality of the advice you receive.
- Retainer billing: When firms charge for a retainer, you pay a flat fee for your advisor’s services, regardless of the amount of time they spend working with you and your accounts on a regular basis.
- Performance fees: These fees are dependent exclusively on performance. This also creates a conflict for the advisor to take on more, in some cases unnecessary, risk in an attempt to maximize the fee they can charge. are when investors charge a percentage of profits on investment gain beyond the management fee. Hedge funds are famous for the 2 and 20, which is a two percent management fee and 20 percent fee on investment gains.
- Side by side fees: That is when a firm charges performance based fees and asset based fees to clients. This also creates a conflict of interest as advisor is incentivize to work on performance based fee clients more than asset based fee clients.
- Wrap fees: In some instances, it bundles advice, commissions, and trade costs, in others it is the investment management fee and also only encompasses trade or custodial costs. This creates an inherent conflict of interest because the advisor may be incentivized to trade less as it impacts their bottom line
Before selecting your personal financial advisor, do your due diligence and understand exactly how much it’s going to cost you. Advisors should be transparent about all conflicts of interest and fees.
2. Advice beyond investments
The markets constantly shift, tax laws change, and currencies fluctuate.
Some advisors’ services are limited to only managed portfolios. However, depending on your unique circumstances, that may be not enough.
Based on your needs, you may want to look for an advisor who can give you advice on allocating your assets based on your finances such as insurance, Social Security, taxes, your mortgage, and your estate.
Our team goes beyond the markets and investments to look for financial planning alpha. See for yourself:
- Brad Owen’s feature quote in the U.S. News and World Report article: The Anatomy of a Good Financial Plan
- Lynn Ballou’s byline in the TheStreet: What Women Need to Know When Saving for Future Retirement Needs
- Elliott Servais’s feature quote in the U.S. News and World Report article: 10 Small Business Tax Deductions
3. Professional experience and the CFP® designation
Securing your financial future is more than just picking stocks and bonds.
Depending on your needs, you may want to look for advisors who have passed the CFP® Certification Examination. This test assesses an advisor’s ability to apply a broad base of financial planning knowledge to each client’s specific circumstances.
Financial advisors who have achieved this level of certification are held to high ethical standards.
Keep in mind that credentials don’t always guarantee better service or better outcomes, but can be an indication of the advisor and their firm’s level of service. In the absence of certifications, you may want to ask advisors about their years of experience with people in your situation.
4. Proactive and responsive
Once an advisor has checked your boxes for what services they offer, it’s time for you look at how they treat you.
Entrusting a firm with your assets, is a major decision—one you shouldn’t make lightly. Generally, advisors understand and are empathetic to this reality. Finding an advisor who you can trust may help to ease the difficulty in making that decision.
- Respectful
- Responsive
- Friendly
- Professional
At EP Wealth, our financial advisors understand that successful relationships are highly collaborative and that by working together, it’s easier for both parties’ visions to be aligned. We genuinely want to get to know you personally, understand your objectives, and work with you to create a long-term plan that helps you build the future you want.
Ready to continue your journey to a healthier financial future?
Contact an advisor today to learn how we can help.
DISCLOSURES
- Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors will satisfy your financial services requirements. Services offered by other advisors may align more to your specific needs.
- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's portfolio. The risk of loss can never be eliminated even if working with a professional.
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. 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 of skill or ability
