Do you ask for the rationale behind the investment decisions involving your portfolio?
Does your broker offer any explanation?
Do you ever wonder if your broker’s recommendations are really the right ones for you?
Does my broker discuss his/her compensation with me?
You probably wouldn’t blindly write a check to a contractor without understanding exactly what you’re paying for. So why would you allow yourself to accept such a relationship with your broker?
Have you educated yourself in the fees and commissions associated with your investments?
Do you understand all the fees and commissions you’re paying as well as how they might be impacting your returns?
Do you have tools at your disposal to clearly track your progress against your goals?
What benchmarks and measures are you and your broker using?
This should be simple and transparent as opposed to confusing and complicated.
All investors need to understand the various risks in their investment portfolio and their tolerance level for those risks. But, how much, and how often, do you discuss these risks with your broker?
Is your broker proactive about communicating possible risks as things change in the markets, economy or in your personal situation?
When discussing investment opportunities with your broker, do you talk about options from various companies, or does it feel that you are often discussing only proprietary products from your broker’s firm?
Does your broker welcome questions about certain products you’ve read or heard about?
Whether you prefer to provide less input or a lot, ultimately, do you feel like you are encouraged by your broker to determine how much of a role you play in the development of your investment strategy?
Does your broker routinely take the time to understand your specific life situation and any changes you may have experienced of late?
How comfortable do you feel updating your broker and revisiting your investments when your personal situation or goals change?
Do you have a team of professionals behind you or just one person?
Can you speak to a specialist in fixed income, global investing or financial planning, when you need to?
Do you feel like you are getting the attention you require or just what your broker has allotted to you?
When going over your portfolio with your broker, do you feel like you’re having meaningful discussion about your portfolio or do you feel like just another appointment on the calendar?
Understanding what fees you’re paying, and how those fees impact your returns, is crucial. Educate yourself and know all the fees you're being charged, such as management fees, commissions, or account service fees, as well as the operating expenses that may be associated with your underlying investments. Knowing these fees can help you make the most informed decisions regarding your investments.
When it comes to your portfolio, doesn’t it make sense that a broker would have the option to make recommendations from a broad range of products industry-wide? While it is common for many firms to offer proprietary products, if you are finding yourself feeling as if many recommendations you receive are for the firm’s proprietary products, consider probing your broker to understand the rationale.
Your long-term investing success depends on a lot more than what "the market" does from year-to-year. Some quarterly reports give you a comparison to a broad market index like the S&P 500 or the Russell 2000. But, a generic benchmark may not tell you how you’re really doing. Your portfolio could be constructed to be more or less aggressive than the overall market. Your broker should work with you to create custom performance benchmarks based on your own personal risk profile.
Ask yourself: What's the worst possible year my portfolio might have - and could I maintain my plan in that environment? If the question makes you squeamish or the answer is no, it might be time to re-evaluate your portfolio and any recommendations you’re getting. Ideally, your broker should be proactive about communicating possible risks as things change in the markets, economy or in your personal situation.
Please note there are certain eligibility requirements if you are interested in working with a dedicated Financial Consultant. Products with lower fees do not guarantee higher returns or that investors will experience lesser losses during periods of market decline. The implementation of any recommendations made as a result of advice provided may result in trade commissions or other fees, charges, or expenses. (0613-4685)