Is your financial adviser doing a good job?

How do you know whether your financial adviser is doing a good job?

You can judge a chef by the taste of your meal and an attorney by the outcome of your case. By contrast, engaging a financial planner to help you with retirement planning, estate planning and wealth management is a longterm endeavor. If your adviser is not performing to a high standard, you may want to seek a new one.

To evaluate the financial planning advice you are getting, ask yourself whether your adviser:

• Has the right credentials. The person you rely on for personal finance advice should be a fiduciary, meaning that he or she is required to act in your best interest at all times, rather than choosing investment products that provide the best benefits to the adviser. The Certified Financial Planner (or CFP) certification is the industry’s gold standard in this regard.

• Discusses your individual needs and goals. Avoid advisers who concentrate on “beating the market” or talk exclusively about investment ideas and financial products. The key to quality financial planning is to understand the client’s lifestyle, values and objectives, then create a diversified portfolio designed to facilitate each of these factors.

• Takes a long-term approach. True financial planning and wealth management is not concerned with short-term gains, much less “get rich quick” schemes. Quality financial advisers craft a portfolio designed to accomplish long-term goals while taking into account your risk profile.

• Communicates with you clearly and often. Your adviser should be responsive to your questions, and should help you understand economic trends, market developments, and the ongoing results of your financial plan. A quality financial planner will help you stay on track and avoid falling victim to either greed or fear.

• Periodically reviews your 401(k) plan. Too many financial advisers

fail to objectively review their clients’ retirement accounts. Lots of 401(k) plans offer great options at low cost, but advisers often fail to assist clients in this important area, preferring to spend their time on aspects of your portfolio that produce fees for them.

• Takes a holistic approach. Wealth management involves far more than setting up investment accounts and should include tax planning, estate planning, insurance review, retirement planning and anything else that applies to your personal and family situation, such as saving for education costs. This includes meeting with your other advisers such as accountants and attorneys, in order to ensure that your financial affairs are being handled in a thorough and consistent manner.

• Adjusts your portfolio and overall financial

plan periodically. When it comes to your life, you cannot just “set it and forget it.” The goals you had yesterday may no longer apply years down the road. In addition, the global economy and financial markets evolve. Your financial adviser should monitor changes in all of these areas and adjust your financial plan accordingly.

• Be cautious in considering investment returns. Advisers sometimes provide potential clients with printouts showing they have outperformed various market benchmarks over the years. This can be a valuable source of information, but be careful: “Past performance does not guarantee future results” is an industry cliché, but it’s a valuable one to keep in mind.

Eric Tashlein Connecticut Money