In this (extended) eposode, I’ll interview Michelle Ogden who is a “Purpose-Driven” Certified Financial Planner. Michelle and I (Jim) met in an online community a year or so ago and have become friends. We’re also connected on LinkedIn.
I’ll also introduce you to a new friend: Scott Plaskett, a Canadian Certified Financial Planner and Podcaster. Scott interviews Charles Wilten – a real life Investment Professional – from Raymond James.
Meet My Friends Michelle Ogden and Scott Plaskett
Scott and I are connected on LinkedIn and Scott generously agreed to let me use some of his (Scott’s) podcast in this week’s episode. Scott’s “Special Feature” section included a fascinating conversation with Charles about his professional approach to selecting the twenty companies in his investment portfolio.
I’m in the process of interviewing three advisory firms to manage my investments. I’ll share why I’m ready to hire an investment professional in this episode and you can share the journey – and the decision-making process – as I interview and select my new investment professional. Here are some of the questions I’ll be asking along the way. My friend Michelle Ogden sent me some articles before our meeting. Michelle is always professional and she’s a great resource. These questions are from one of the articles Michelle sent – click here to read the Ric Edelman article.
What Other Costs Will You Incur – in Addition to Professional Investment Fees?
As we’ve seen, there can be a huge difference between what your advisor charges you and how much you actually pay. If you open an IRA account, for example, will you have to pay a set-up fee? Will you pay a termination fee when you close the account or transfer money to a different account? Some brokerage firms and insurance companies charge annual maintenance fees or other charges. You won’t know in advance what these costs are unless you ask. So make sure you receive complete disclosure about the total costs you will pay to implement the recommendations that your advisor will give you. And make sure you receive this disclosure in writing, before you agree to retain the advisor’s services or invest any money.
What Services Do You Offer
Before you walk into a doctor’s office, you already know where it hurts. Likewise, you know what you need from your advisor. Does he provide those services? The typical services needed include financial planning (including college and retirement planning), insurance analysis, tax advice and preparation, investment management, and estate planning. But many advisors only handle one or two of these areas, leaving the rest to other practitioners you have to hire.
Make sure your Investment Professional’s expertise and services match your needs, and if you need additional services, ask if the Investment Professional will assist you in coordinating all those services or whether you have to do it yourself. A related question pertains to documentation. Will the Investment Professional handle all record-keeping chores for you and provide you with all the information you’ll need for tax preparation? How often will you receive statements and can you check the status of your accounts at any time online? If the Investment Professional issues performance reports, make sure they conform to the Global Investment Performance Standards, which dictate how firms calculate and report investment results.
What Process Does Your Investment Professional Use for… Investing?
Ask if the Investment Professional has a fundamental philosophy that guides her investment approach, and if so, ask her to describe it fully. Many don’t have a formal approach to investment management; instead they merely sell a variety of investment or insurance products without any established methodology or approach. If there is a formal approach in place, find out what it is and how the investment professional came to develop it. Did she create it alone, or is there a formal Investment Committee operating under specific policies and protocols? Find out how long the current approach has been in place — which leads to the next Interview Question.
What Professional Investment Advice Was Offered Before – and After – The Financial Meltdown
Learn what kinds of advice and investments she was typically recommending in 2005–2007 and whether she is still giving that type of advice today. Ask how many clients she had in 2007, and how many of them are still with her today. If many of her clients left her, it could be because the investments she had recommended didn’t perform well, or she hadn’t clearly explained the risks of those investments, or she hadn’t remained in close contact with those clients during the market meltdown and proved unsuccessful in meeting their needs. Any of this must make you wonder if you will be happy with her over time.
What Other Roles or Licenses Does The Investment Professional Hold?
In my experience – both as a financial consumer and a financial sales professional – I’ve learned that there are a lot of people who make a living selling stuff. When it comes to hiring an Investment Professional, I would strongly suggest that you find someone who lives and breathes “Investments”. Investment Planning is only one of seven essential elements in the financial planning process – but it is a very important element. Taking advice from an Insurance salesman or even a stock broker is risky business. Trust me. Not all Investment Professionals are the same.
Join me next week as I continue the conversation about “Investment Planning”.
Until next week, be safe and don’t forget to Make Your Money Count!