Quick Facts
These Quick Facts are responses to questions that reflect your concerns about the quality of advisors and the companies they work for. If you don't see an answer to your question, contact us at info@paladinregistry.com. We'll respond in two working days or less.
Q: Is ethical advisor an oxymoron?
Close, but not quite. Paladin's research shows that less than 10% of all financial advisors are willing to place investor interests ahead of their own.
Q: What's the difference between a planner and an advisor?
Planners help you develop a road map for your financial future (financial plans, retirement plans, estate plans). Advisors drive the car by helping you implement the plans and achieve your financial goals. The two types of professionals have very distinct roles, but most provide both types of services. This creates another risk because some planners are weak advisors and vice versa.
Q: What is a simple description of a high quality financial professional?
A competent, trustworthy advisor who will put your needs ahead of his or her own.
Q: What about advisor references?
You should put a very low value on references. In fact, they are close to worthless in regard to their ability to help you determine the quality of advisors. Why worthless? No advisor will deliberately give you a bad reference. Plus, references can be coached and for all you know you are talking to the advisor's brother-in-law. This is a popular sales tactic for lower quality advisors.
Q: Why is selecting a financial professional so important?
It's the most important decision you'll ever make for your financial future. That's because the professional will influence or control all of your financial decisions. Ultimately, these decisions will determine your standard of living and financial security during retirement.
Q: Do high quality advisors produce better results for investors?
There are no guarantees, but it stands to reason high quality advisors have more knowledge so they will produce better results. For example, a higher quality advisor will frequently recommend more sophisticated strategies that provide competitive returns in up and down markets.
Q: How are high quality professionals compensated for their services?
First of all, you are compensating the advisors for knowledge that will help you achieve your goals. Investors with more than $100,000 usually pay fees for that knowledge. Investors with small asset amounts frequently pay commissions to obtain the help they need. Whenver you pay commissions for advice, you have higher exposure to bad advice and conflicts of interest.
Q: Should I avoid advisors who are compensated with commissions?
Not if you are an investor with a smaller amount of assets. This method of compensation may be the only way you can afford the services of a financial planner. Commission professionals should complete the same evaluation process as a fee-based professional.
Q: How do you select the best advisor when both are good?
You can choose either one if you know you have narrowed your selection to two top quality professionals. Subjectivy is ok at the end of your selection process, you just don't want it to influence your decision at the beginning of the process. Early in the process, you may be selecting an advisor for his or her personality or sales skills.
