We recently came across (via a colleague) a succinct and straightforward description of what matters most in selecting a financial advisor. Below we have included some of what was written by an Atlanta securities lawyer, Robert Port (Cohen Goldstein Port & Gottlieb, used with permission).

 "I have a strong opinion that people who properly manage money are those who are "fee only" investment advisors and who are members of NAPFA (NB- I am a former president of NAPFA, both Katie and I are active members)...I have a strong aversion to any investment advisor whose business model is based, in whole or in part, on earning commissions.

I also prefer advisors who follow a passive investing strategy. This is to be contrasted with active managers who claim they can beat the market by identifying which stocks, bonds, or mutual funds are about to go up or down, and buy or sell in hope of timing the market.

I would never use a traditional brokerage firm to manage my money. Most traditional brokerage firms operate on an active management basis. Also, most brokerage firms operate on a commission basis, or if they charge on a fee based model, charge very high fees.

I also have a strong preference for advisors approved to offer index funds from Dimensional Fund Advisors (DFA)...DFA does not permit just anyone to offer their funds, and from my understanding, requires that advisors who offer their funds undergo a rigorous approval process.

I am very leery of advisors who work for insurance companies, or who primarily offer insurance products. Too often those advisors see insurance as the cure for every ill. That is because many insurance products pay high commissions. Often, insurance is a very expensive solution to a problem that could have been addressed using a different, and less expensive, investment strategy."

We find very little to quibble with in Mr. Port's comments. He has the perspective of seeing problems with the traditional financial services model and contrasts that with the manner that firms like ours conduct ourselves. His thoughts are direct and without nuance which makes them all the more powerful. When thinking about how we are different that the big brokers take a look back at this for a quick refresher.  

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 - James E. Wilson, CFP®                       

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