Find the right advice

In 1999, the word “advice” didn’t mean much to investors. Practically everyone was giving it – in-laws, barbers, even taxi drivers! It’s easy to give advice when things are going well. It’s when things are not going so well that the right advice stands out. How do you know if you’re getting the kind of advice you need now - the right advice for your unique personal and financial situation?

Unfortunately, advice is not something we can see or feel. It is not something we can grab onto. This makes the decision to choose the right financial advice for you and your family less clear cut; decisions that are made with less confidence. If it were something you could pull down from the shelf, you’d simply take a look, see if the advice felt nice when you held it, was the right color or size, and make a decision. As it is, investors are often left asking themselves, “Am I really doing the right thing?”

When confusion and emotions take over, it’s much easier to make unwise investment decisions. The right advice can keep you on course with your plans. It supports you in the long-term realization of your dreams. It gives you the confidence you need to focus on other things in life that are important, such as your business, your family, the activities you enjoy.

The right advice has elements that are unmistakable. It’s not a surface kind of thing. It speaks to your deepest concerns, your financial objectives, and takes into account the things that are happening in your life. And it makes sense – for your particular circum-stances.

Because of the market action over the last couple of years, many people may be worried that they won’t be able to do the things they’d planned on. The advice they thought was going to guide them didn’t work out as well as they had hoped. How do they plan for the future now? What’s the best road for them to take? There is a solution.

What does the right advice look like?

One of the first things to understand about the right advice is that it involves a relationship. The person you choose to guide you in your financial life should be someone who cares enough to sit down with you and learn about the aspects of your life that will affect your financial future. He or she needs to fully understand what you want that future to be. This advisor needs to be objective and to be able to offer you whatever investment instru-ment will fit your needs the best.

A qualified advisor should be independent of all outside influences. He or she should be guided only by your financial needs and objectives and his or her own expertise. Once the time has been taken to really know what you are trying to accomplish, the advisor will help you determine which asset classes will offer you the best possibilities of reaching the returns you are seeking. He or she will also help you become more aware of how much risk you are willing to take to achieve those returns. That’s the first side of the story about asset allocation.

The second side involves the investment instruments themselves. This is a very important issue. For instance, maybe you’re getting close to retirement and are looking for something to supplement your income. With interest rates at their lowest levels in 40 years, you might not want to invest in short-term bonds. More than likely, you’ll want to buy longer maturity bonds or maybe even high yield bonds. Or, you might want to use alternative investments, such as real estate.

If you want your assets to grow, you probably want stocks in your portfolio. Choosing the right mix of stocks is paramount to your success. You need an advisor who has unfettered access to a wide variety of equity management styles and the research to support his or her expertise in creating the right mix to achieve your goals.

Quality advice should also be charged on a fee basis. Fee compensation eliminates conflicts of interest in financial management and allows the advisor to view your investment plan from your perspective. He or she can truly be a part of your financial success team.

Where do you go to find it?

An independent advisor has the ability to choose the appropriate investment instruments and portfolio managers for you. He or she has access to independent research on a wide variety of money managers, mutual funds, and alternative investments. Depth of style treatment available within each asset class allows your advisor to choose a combination of investment managers that will serve your needs in a more comprehensive manner.

The professionals who actually manage your money need to be specialists. The appropriate combination of these specialists can give you consistent, sustainable performance, which will increase the likelihood of meeting your financial goals.

A qualified advisor needs access to dependable resources that meet high quality standards. He or she needs tools that support prudent investment philosophies – philosophies that are grounded in objective research and experience.

What about taxes?

Tax considerations can play a big part in your financial success. Investors lose approximately 20 percent of their investment returns to taxes. Yet, taxes are often overlooked as a critical part of the investment process. To make sure you are getting the right advice, you want your advisor to have access to a team of professionals who take tax implications into consideration.

Tax-efficient investing can help you use disappointing investment results to your advantage. By adding portfolio managers to your mix who focus on effective tax management, you can use bad markets, as well as good ones, to your advantage. The structure of your investment portfolio through prudent diversification can also help to manage your tax liability. For instance, if you had both a growth manager and a value manager in your portfolio over the last couple of years, you may had not only better performance, but also better tax consequences.

Your ongoing relationship.

After you’ve gone through the entire investment process, you may think everything is set up and you don’t have to worry about it any more. Nothing could be further from the truth. Markets and economic conditions change. If your portfolio is working for you as it should, your asset allocation parameters will occasionally get out of balance. Strategies set forth in your investment plan must be followed conscientiously. Events that occur in your life may necessitate changes in those strategies. You need someone to keep a vigilant eye on your investments on an ongoing basis and who will be in tune with your life changes and events as time goes by.

By doing so, an advisor can help you sleep at night during times of market volatility. He or she can also keep you from straying from your investment plan during times of compelling market strength. Bull markets are great. But prudent management during bull markets is just as important, perhaps even more, than in bear markets. Having a steady hand to guide you, one that is objective and is focused on your well being during good markets and bad will help you feel confident about your future. It can help make your plans actually happen.

Find the right advice.

In short, an advisor who is selling products or quick fixes has difficulty placing your benefit above his or her own. An advisor who is allowed the independence to be a true consultant will be someone you can trust to have your interests in mind when determining asset allocation, substyle mix, and the right mix of asset managers. He or she will also be able to keep tax considerations in mind, helping your portfolio to serve every aspect of your needs.

Finally, you will have an ongoing relationship with this advisor. At Profile Investment Services you will find the objective, professional trust relationship you are seeking. You will find a relationship that can be a trusted, invaluable ingredient in your life, as well as in the lives of your children. As an independent advisory firm, we are free to offer our clients the best investment solutions customized for their peace of mind. Market and economic changes will continue to take place. By working with an independent advisor, you can be confident you’re future, and the future of your family, is in good hands.