Hand writing Second opinion with marker, concept background

Do You Need a Second Set of Eyes?

Cern Basher Brilliant Insights, Finding a Financial Planner 0 Comments

When it comes to your finances, you should get a second opinion. Here’s why.

When it comes to your financial life, the consequences of your decisions—or your advisor’s decisions—can be long-lasting and significant. Mistakes can be very costly and they can have a big impact on how well you can enjoy your retirement years.

How will you feel if 10 years from now you realize your portfolio has been invested incorrectly or you made a mistake that could have been easily avoided?

Don’t make that blunder!

Get a second opinion on your portfolio. After all, it’s your money and your future that’s at stake.

Things to Keep in Mind When Asking for a Second Opinion

Have the right professional do the review – Referrals from friends or relatives are a good place to start when deciding which financial professional should review your portfolio. But do your own homework as well before handing over your financial information. Find out if there will be a fee for the second opinion and how the information will be reported to you. Having it laid out as a side-by-side comparison to your current plan is the most useful method and the easiest to understand.

And don’t just turn over your financial statements to an advisor for a second opinion. Your statements are just part of your story. There is more than that to think about. The advisor doing your second opinion review needs to understand your goals and objectives and what your investments are supposed to do for you. They should ask “What do you want your money to do for you?” If they aren’t interested in you, you shouldn’t be interested in them.

When to get a second opinion? Sooner rather than later. As the saying goes, “Bad news doesn’t get better with time.” And while a review of your investments will not necessarily bring bad news, if there are ways to improve your investing strategy it’s better to know now so you have the time to act on them.

Financial advisors who are truly looking out for your best interest will not want to disrupt a financial relationship that is already working well for you. Keep that in mind too.

What a Good Second Opinion Will Reveal

The past – A good second opinion will examine how your investments are currently invested by reviewing past account statements. A thorough analysis will show how the investments in each of your accounts have performed over time, how they work together or against each other, and what mistakes may have been made.

Risk and volatility – A good second opinion will assess how your portfolio is currently positioned and how that positioning can affect your investment returns. What kinds of risks are you taking? How will your portfolio hold up if there is a significant drop in the financial markets? A second opinion can determine if your portfolio is aligned with your tolerance for the ups and downs of the financial markets.

The future – A good second opinion will show you what your expectations should be for the future based on how your portfolio is currently positioned. What are the expected future returns for your portfolio? Will these expected returns allow you to meet your goals? A good second opinion will be able to give you an indication of whether your portfolio is properly positioned to achieve the returns you need.

Costs –  A good second opinion will help you determine if the fees and expenses you are paying are reasonable. Fees not only put a drag on your investment returns today but they compound over time. One way to increase your returns is to reduce expenses by lowering advisory fees or using lower cost investment options. But, make sure you aren’t sacrificing service for a fee reduction. There are many ways to reduce costs. Make sure your financial advisor is open to exploring ways to save you money.

Who is Your Advisor? – Is your advisor a fiduciary in all of their dealings with you? Under law, a fiduciary is required to always act in your best interest and avoid having any conflicts of interest between you and him. It is always important to review your advisor’s employment history, professional qualifications, whether they have any disciplinary actions, criminal convictions, civil judgements or arbitration awards on their record. This information is available on all current registered securities brokers and firms, and on all investment advisory firms and their representatives. It is your right to know your advisor’s background.

What to Do With the Information

What you do with your investment second opinion depends on you. You could take everything directly to your financial advisor and let her review it. Don’t worry about offending or upsetting your advisor—if she is truly looking out for your best interest she’ll be happy to consider any information that helps increase your financial security.

I Know I Should Leave but I Can’t

Perhaps you’ve discovered you are paying too much in fees, or you were sold products that don’t make sense for your situation, or your advisor doesn’t offer some of the services you now need such as up-to-date technology or retirement planning tools.

One of the hardest decisions for some investors is deciding to leave an advisor who they have been with for a long time. Keep in mind that an advisor who was once a good fit for you in the past may not have the skills for your present and future needs. Wanting to avoid the short-term discomfort of firing your advisor can cause you to improperly weigh the financial implications of your decision. And unfortunately, this avoidance can have a long-term negative effect on your finances and ultimately your retirement lifestyle.

Retirement is the most expensive thing you will ever pay for, so make sure you aren’t making any costly mistakes. Get a sound second opinion.

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