Choosing the Right Financial Advisor | Part 2: Which Professional Credentials are Most Important to You?

Unfiltered Finance

Not all financial advisors are created equally. Some have certified credentials, some charge their clients fees, and others may get paid on commission (if they offer investment products). In part two of this podcast episode, our own Tom Romano, Head of Strategic Relationships and Product Development, is joined by Symmetry’s Michael Storer, Senior Regional Director, and a financial advisor from our sister firm, Apella Wealth, Peter Leppones, CFP®, to discuss the important credentials of, and differences between, financial advisors.

If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/

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Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.

Transcript:

0 00:00:01.900 --> 00:00:07.500 Welcome back

1 00:00:07.500 --> 00:00:10.500 to part 2 of choosing the right financial advisor. This

2 00:00:10.500 --> 00:00:13.100 is Tom Romano with unfiltered finance and I'm back

3 00:00:13.100 --> 00:00:16.200 here with my guests. Mike store senior Regional director at

4 00:00:16.200 --> 00:00:20.000 symmetry partners and Peter laponis financial advisor

5 00:00:19.200 --> 00:00:22.200 and cfp at Apollo wealth. Thank you for joining us

6 00:00:22.200 --> 00:00:25.400 gentlemen, so go Peter certified financial

7 00:00:25.400 --> 00:00:28.400 planner see FP Mike. I'm

8 00:00:28.400 --> 00:00:31.800 asked this question to you because Peter is a cfp. What

9 00:00:31.800 --> 00:00:34.700 are the credential what other credentials that investors should

10 00:00:34.700 --> 00:00:37.200 be looking for as they're going through this process of choosing a

11 00:00:37.200 --> 00:00:40.500 financial advisor. I mean cfp certainly is one of them sure. There's

12 00:00:40.500 --> 00:00:43.200 you know, I mean I come across a wide variety

13 00:00:43.200 --> 00:00:47.500 of different advisors and that have different different designations

14 00:00:46.500 --> 00:00:49.300 and it and sometimes it

15 00:00:49.300 --> 00:00:52.400 depends on it depends on you know, what type

16 00:00:52.400 --> 00:00:56.400 of work they're doing for the client. It may not always be, you know

17 00:00:56.400 --> 00:00:59.400 cfp, but most of the advisors that I'm working with their

18 00:00:59.400 --> 00:01:01.500 certified financial planners, but there's

19 00:01:01.900 --> 00:01:05.000 there's SEMA, you know, which is a certified Investment

20 00:01:04.500 --> 00:01:07.800 Management associate, I

21 00:01:07.800 --> 00:01:10.500 believe and that I look

22 00:01:10.500 --> 00:01:13.500 at CFA and see Sima as kind of two different

23 00:01:13.500 --> 00:01:14.300 designations that

24 00:01:15.500 --> 00:01:18.200 Are are very strong. I mean these people are incredibly smart.

25 00:01:18.200 --> 00:01:21.700 They pass a lot of tests to get where they are. But I

26 00:01:21.700 --> 00:01:24.500 look at the see the SEMA and the

27 00:01:24.500 --> 00:01:27.300 the CFA which is a chartered financial

28 00:01:27.300 --> 00:01:31.100 analyst as more geared towards Investments to

29 00:01:30.100 --> 00:01:33.300 a certain extent. So they're if you've

30 00:01:33.300 --> 00:01:37.000 got an advisor that is more seamors or CFA oriented.

31 00:01:36.500 --> 00:01:40.300 I think you're probably you could and Peter

32 00:01:39.300 --> 00:01:42.900 you can correct me if I'm wrong lean more

33 00:01:42.900 --> 00:01:45.800 towards them probably approaching it from an investment perspective.

34 00:01:45.800 --> 00:01:49.100 Whereas I think a cfp is

35 00:01:48.100 --> 00:01:52.100 going to approach the relationship from everything

36 00:01:51.100 --> 00:01:54.400 that Peter just talked about in terms of how they

37 00:01:54.400 --> 00:01:57.200 want to how they want to work with you moving

38 00:01:57.200 --> 00:02:00.300 forward Investments are important no doubt, but I think from

39 00:02:00.300 --> 00:02:03.700 the standpoint of the approach if

40 00:02:03.700 --> 00:02:06.200 you're looking for a planner, you know a cfp is

41 00:02:06.200 --> 00:02:10.000 where you want to be if you want someone that's more focused on. Okay, I'll construct

42 00:02:09.300 --> 00:02:12.800 a portfolio for you, but I think Sima and

43 00:02:12.800 --> 00:02:15.300 CFA tend to lose tend to

44 00:02:15.400 --> 00:02:18.200 Themselves more towards investment only to a certain

45 00:02:18.200 --> 00:02:21.400 extent now that's not every single or CFA but I think from that

46 00:02:21.400 --> 00:02:24.400 perspective those types of designations. Those are the ones that I come across

47 00:02:24.400 --> 00:02:27.700 primarily obviously, there's other designations with

48 00:02:27.700 --> 00:02:30.400 the insurance realm that you know, you like a

49 00:02:30.400 --> 00:02:33.200 chfc that would be which I

50 00:02:33.200 --> 00:02:36.400 I don't even remember that. It's a chartered leave its chartered Financial

51 00:02:36.400 --> 00:02:39.700 consult consultant, right which is different than a chartered financial analyst

52 00:02:39.700 --> 00:02:42.400 which is kind of interesting but you know, they'd be focused more on

53 00:02:42.400 --> 00:02:45.500 and probably the insurance side of the investment process.

54 00:02:45.500 --> 00:02:48.200 So I come across a lot but I would say

55 00:02:48.200 --> 00:02:51.900 that I feel comfortable saying it that the

56 00:02:51.900 --> 00:02:55.400 cfp is the designation where you know, mostly you're

57 00:02:55.400 --> 00:02:58.600 going to be getting more of a planning approach. Whereas I

58 00:02:58.600 --> 00:03:02.200 think the other designations might lean towards something else within

59 00:03:01.200 --> 00:03:04.700 the whole scope of planning but more,

60 00:03:04.700 --> 00:03:07.100 you know designated or specific on that

61 00:03:07.100 --> 00:03:11.000 side sure. I think it's important, you know, individuals professionals

62 00:03:10.500 --> 00:03:14.000 regardless of the industry having credentials after

63 00:03:13.400 --> 00:03:15.400 their name shows that they're

64 00:03:15.400 --> 00:03:18.600 to the business. They're probably lifelong Learners,

65 00:03:18.600 --> 00:03:23.000 which is something you probably want to look for in a financial advisor. And

66 00:03:21.200 --> 00:03:25.300 I would agree with you a cfp

67 00:03:24.300 --> 00:03:27.600 is probably the starting point. However, the

68 00:03:27.600 --> 00:03:31.000 the SEMA the Cima in the CFA,

69 00:03:30.200 --> 00:03:33.900 which I would agree are more investment driven.

70 00:03:35.700 --> 00:03:38.100 Um working with a firm who has a cfp has the point

71 00:03:38.100 --> 00:03:41.300 of contact Peter, but that doesn't mean you don't have access to

72 00:03:41.300 --> 00:03:44.500 cfa's and seamas as well. Right, correct. And

73 00:03:44.500 --> 00:03:47.500 that's that's part of the teamwork approach here that you

74 00:03:47.500 --> 00:03:51.200 know behind the scenes. I know that there's cfas working on our portfolios.

75 00:03:50.200 --> 00:03:53.100 So so I think

76 00:03:53.100 --> 00:03:57.500 you could see someone with another non-cfp designation

77 00:03:57.500 --> 00:04:00.200 but is what's their firm like do they have a team behind

78 00:04:00.200 --> 00:04:04.100 them is maybe they have a a young hire

79 00:04:03.100 --> 00:04:06.700 a new hire coming out of college who's studying

80 00:04:06.700 --> 00:04:09.200 for his or her cfp and that's their parent plan

81 00:04:09.200 --> 00:04:12.600 who works on the financial plan. So I mean to I think

82 00:04:12.600 --> 00:04:15.300 you might be doing a disservice just because

83 00:04:15.300 --> 00:04:18.400 someone doesn't have cfp understand more about what's

84 00:04:18.400 --> 00:04:21.200 what's going on at the firm and not just

85 00:04:21.200 --> 00:04:25.100 the designation. But I do agree having a designation and you

86 00:04:24.100 --> 00:04:28.400 made you reminded me. My continuing

87 00:04:27.400 --> 00:04:30.500 ed is coming up and it's it's comprehensive. I've

88 00:04:30.500 --> 00:04:34.000 got I've got a lot to do several hours to to

89 00:04:33.000 --> 00:04:34.100 keep

90 00:04:34.600 --> 00:04:37.500 Cfp designation current I've

91 00:04:37.500 --> 00:04:40.800 got to do some continuing education requirements online. Yeah, me

92 00:04:40.800 --> 00:04:43.100 too. Thanks for the reminder. I would say I didn't

93 00:04:43.100 --> 00:04:46.300 mean to say that, you know, the cfp is definitely starting point. But Peter

94 00:04:46.300 --> 00:04:49.800 brings up a great point that you when you visit with these cfps. They

95 00:04:49.800 --> 00:04:50.800 do have those other.

96 00:04:51.600 --> 00:04:54.400 People in their organizations that cover those parts

97 00:04:54.400 --> 00:04:57.200 of the planning process for them from that standpoint

98 00:04:57.200 --> 00:05:00.200 So and I've met many cfps that have their SEMA or have their CFA as

99 00:05:00.200 --> 00:05:03.400 well. So depends on who I'm speaking with, but there's there's a

100 00:05:03.400 --> 00:05:06.400 wide variety of different designations and some have won

101 00:05:06.400 --> 00:05:10.000 some have many or some have, you know, more than one right? So something

102 00:05:09.200 --> 00:05:12.400 that you would recommend investors look for as they're gonna

103 00:05:12.400 --> 00:05:15.200 go through absolutely. Absolutely. Absolutely. Yeah Mike we

104 00:05:15.200 --> 00:05:18.100 for all the cfps out there yet. We're definitely the top

105 00:05:18.100 --> 00:05:21.200 designation. No doubt about no doubt about it. We can

106 00:05:21.200 --> 00:05:25.900 leave it at that. Very good very good. So I

107 00:05:25.900 --> 00:05:28.500 have a few more questions and this has been great gentlemen, but

108 00:05:29.700 --> 00:05:32.800 What are some of the resources online resources

109 00:05:32.800 --> 00:05:35.400 right, you know, I don't think people use phone books

110 00:05:35.400 --> 00:05:39.100 anymore to find Financial professionals. What are

111 00:05:38.100 --> 00:05:41.100 some of the things my gear you're working

112 00:05:41.100 --> 00:05:44.000 with thousands of advisors. Like how do you how do you

113 00:05:44.100 --> 00:05:47.200 go about and find an advisor that that you would want to work with

114 00:05:47.200 --> 00:05:50.600 a professional level but not only professional of

115 00:05:50.600 --> 00:05:53.900 us person maybe from even personal standpoint where can

116 00:05:53.900 --> 00:05:56.300 investors go? Well they can they can you

117 00:05:56.300 --> 00:05:59.800 know go online and you know, there's a couple of different organizations that

118 00:05:59.800 --> 00:06:02.700 are out there that you could look at like the Financial Planning Association is

119 00:06:02.700 --> 00:06:05.600 a great place to start that's that's a

120 00:06:05.600 --> 00:06:08.600 big one National Association of

121 00:06:08.600 --> 00:06:11.800 personal financial advisors is another great site

122 00:06:11.800 --> 00:06:14.600 as well the certified financial planner

123 00:06:14.600 --> 00:06:17.100 board. You can go that route as well. I mean,

124 00:06:17.100 --> 00:06:20.400 that's probably the best place to start you can find someone in your general area

125 00:06:20.400 --> 00:06:23.100 that could help you there. There's another firm out there

126 00:06:23.100 --> 00:06:26.600 XY Planning Network which is which

127 00:06:26.600 --> 00:06:29.300 is a pretty good tool for to search for fee only.

128 00:06:29.700 --> 00:06:32.200 Financial advisors you mentioned, you know

129 00:06:32.200 --> 00:06:35.200 word of mouth or referrals from from your friends

130 00:06:35.200 --> 00:06:38.200 or family that may be working with a financial advisor. So all of

131 00:06:38.200 --> 00:06:41.100 them are great great ways to to identify some of

132 00:06:41.100 --> 00:06:44.300 that you might want to work with at least get the opportunity to interview them to see

133 00:06:44.300 --> 00:06:47.700 if they would be a good fit for you. Yeah. I think there's a lot of great resources online,

134 00:06:47.700 --> 00:06:50.500 you know, one of the things that Peter and

135 00:06:50.500 --> 00:06:53.500 I talk about quite a bit is you know working with someone

136 00:06:53.500 --> 00:06:56.200 who understands you someone who's working with

137 00:06:56.200 --> 00:06:58.600 other investors like me.

138 00:06:59.300 --> 00:07:02.900 Right in a lot of times if someone has a very specific need or

139 00:07:02.900 --> 00:07:05.500 specific sort of outcome. They're

140 00:07:05.500 --> 00:07:08.800 looking for they can identify the right Financial professional

141 00:07:08.800 --> 00:07:11.200 by not only looking at those websites, but

142 00:07:12.200 --> 00:07:15.100 LinkedIn Facebook. Look, who are these?

143 00:07:15.100 --> 00:07:18.300 Look who at the who these advisors are look at

144 00:07:18.300 --> 00:07:21.500 the circles that they're in right? You know it a funny story my parents

145 00:07:21.500 --> 00:07:24.200 who are not great investors. They were

146 00:07:24.200 --> 00:07:27.400 both School teachers had a pension but when they were looking for

147 00:07:27.400 --> 00:07:30.400 financial advisor, they didn't look any

148 00:07:30.400 --> 00:07:33.700 further than you know, the Connecticut Teachers Retirement Financial

149 00:07:33.700 --> 00:07:36.400 advisory. It was a really long name like

150 00:07:36.400 --> 00:07:39.500 that. I know I'm butchering it and talking it right but they will

151 00:07:39.500 --> 00:07:42.600 work Connecticut Teachers that must be the guy that we work with without even

152 00:07:42.600 --> 00:07:45.800 thinking twice about it, but they knew they felt comfortable and

153 00:07:45.800 --> 00:07:48.500 they trusted that the this particular individuals working

154 00:07:48.500 --> 00:07:49.900 with other, Connecticut Teachers.

155 00:07:50.800 --> 00:07:53.400 Here to add to any of that Peter. I mean, I think that

156 00:07:53.400 --> 00:07:56.400 you know, I've had done. Oh my

157 00:07:56.400 --> 00:07:57.600 second cap. We have pulled that one back.

158 00:07:58.300 --> 00:07:59.300 I won't ask that question better.

159 00:08:00.300 --> 00:08:00.300 All right.

160 00:08:04.500 --> 00:08:05.500 so Peter

161 00:08:06.900 --> 00:08:09.200 You know, I've talked about this it it's a mutual

162 00:08:09.200 --> 00:08:12.400 interview between an advisor and an investor the investors making

163 00:08:12.400 --> 00:08:16.000 a choice, but the advisors making a choice as well. So talk

164 00:08:15.200 --> 00:08:17.800 a little bit about that process if you will.

165 00:08:18.400 --> 00:08:21.700 Yeah, I think that's that's a great question. And I definitely

166 00:08:21.700 --> 00:08:24.300 encourage people to come up with a

167 00:08:24.300 --> 00:08:28.000 list of questions and interview multiple

168 00:08:27.500 --> 00:08:30.200 advisors definitely. But yeah, when when

169 00:08:30.200 --> 00:08:33.500 I'm meeting with with a New Prospect, I'm interviewing

170 00:08:33.500 --> 00:08:36.700 them as well. And there's things I'm I'm looking

171 00:08:36.700 --> 00:08:39.900 for I want to make sure that number

172 00:08:39.900 --> 00:08:43.600 one there. They're gonna be happy working with us. I've

173 00:08:42.600 --> 00:08:45.500 told people who I refer to

174 00:08:45.500 --> 00:08:48.000 them as Gunslingers. They want to pick stocks. They want to

175 00:08:48.100 --> 00:08:51.500 be in and out of the market they want they want action and I've told

176 00:08:51.500 --> 00:08:54.800 people I go I don't think we're gonna be a good fit. I'm a

177 00:08:54.800 --> 00:08:57.000 nice person. You seem like a nice person you seem to get along but

178 00:08:57.800 --> 00:09:00.300 we're going to have different philosophies and and I want

179 00:09:00.300 --> 00:09:03.200 you to be happy and I don't want to waste your time and I

180 00:09:03.200 --> 00:09:06.200 don't want to have my time wasted and so I've had to tell people I just don't think

181 00:09:06.200 --> 00:09:09.800 that this is necessarily going to work. Um, also there's

182 00:09:09.800 --> 00:09:12.300 when I start to hear people talk and I say this

183 00:09:12.300 --> 00:09:12.800 to clients

184 00:09:13.500 --> 00:09:16.600 and Prospects I start to get a gut feeling about what's

185 00:09:16.600 --> 00:09:19.400 going on. And when I start to hear about things like

186 00:09:19.400 --> 00:09:22.300 well a lot of debt, you know, you've got

187 00:09:22.300 --> 00:09:25.600 and not good. You don't have good financial habits.

188 00:09:25.600 --> 00:09:28.300 You're spending all your money. You've got

189 00:09:28.300 --> 00:09:31.200 a lot of debt a lot of bad debt. It's one thing to have a mortgage your car

190 00:09:31.200 --> 00:09:34.100 payments. Those are those are necessary. We'll call those

191 00:09:34.100 --> 00:09:38.200 good debt necessary debt. We start talking about large student

192 00:09:37.200 --> 00:09:40.500 loans. We start talking about large credit

193 00:09:40.500 --> 00:09:41.300 card balances.

194 00:09:42.500 --> 00:09:45.900 I may not be able to work with you. I you may be better off going

195 00:09:45.900 --> 00:09:49.600 and having credit counseling done first because I

196 00:09:48.600 --> 00:09:52.000 can maybe give you some pointers but I've

197 00:09:51.100 --> 00:09:54.400 had to unfortunately tell people that we may

198 00:09:54.400 --> 00:09:57.600 not be a good fit. There wasn't a whole lot I could do because they

199 00:09:57.600 --> 00:10:00.700 just they just didn't have the assets. They needed to get really the

200 00:10:00.700 --> 00:10:03.400 basics of their budgeting or spending plan

201 00:10:03.400 --> 00:10:06.600 down and start to work on that debt. And that's not something we're

202 00:10:06.600 --> 00:10:07.000 necessarily.

203 00:10:08.500 --> 00:10:11.600 Working on it'd be more of sort of a credit agency

204 00:10:11.600 --> 00:10:14.600 helping them to kind of get that square away. Absolutely. You

205 00:10:14.600 --> 00:10:17.500 mentioned working with, you know, other sort of

206 00:10:17.500 --> 00:10:20.200 financial professionals that you you work with

207 00:10:20.200 --> 00:10:20.400 other.

208 00:10:21.500 --> 00:10:25.400 Financial professionals as well. I mean maybe not direct financial

209 00:10:25.400 --> 00:10:28.400 advisors, but tax advisors and things like that. Oh, definitely.

210 00:10:28.400 --> 00:10:31.400 I like to say that the analogy is I'm

211 00:10:31.400 --> 00:10:34.600 I'm sort of the quarterback or I'm your

212 00:10:34.600 --> 00:10:37.700 your primary care physician if we need to bring in a specialist,

213 00:10:37.700 --> 00:10:40.300 you know cardiologists so forth

214 00:10:40.300 --> 00:10:41.900 weekologists.

215 00:10:44.400 --> 00:10:46.100 So but I'm working with.

216 00:10:47.200 --> 00:10:50.300 I'll work with the client's attorney to talk about their state plan

217 00:10:50.300 --> 00:10:54.500 work with a client's accountant or CPA to

218 00:10:54.500 --> 00:10:57.500 talk about if we need to do some rebalancing in the portfolio before

219 00:10:57.500 --> 00:10:59.200 I do any of that.

220 00:11:00.200 --> 00:11:04.000 And start triggering capital gains. I want to make sure that the accountant is

221 00:11:03.400 --> 00:11:06.400 on board with it and we understand what the

222 00:11:06.400 --> 00:11:09.500 ramifications are of those actions or in

223 00:11:09.500 --> 00:11:12.800 actions because the last thing a client wants is a

224 00:11:12.800 --> 00:11:15.800 surprise attack time. There's something psychological about

225 00:11:15.800 --> 00:11:18.700 a big tax bill staring you in the face and it's

226 00:11:18.700 --> 00:11:21.100 one thing to not know about it and have to

227 00:11:21.100 --> 00:11:24.200 pay it. It's another thing. All right, you know what we knew about this, but we know why we

228 00:11:24.200 --> 00:11:27.300 did it. So I'm constantly working with

229 00:11:27.300 --> 00:11:30.900 with other Professionals in helping clients

230 00:11:30.900 --> 00:11:32.800 with taxes and in legal issues.

231 00:11:33.700 --> 00:11:36.300 That's fantastic. Yeah, so that's another thing that investors should

232 00:11:36.300 --> 00:11:39.100 be looking for. Is there a true team approach? Maybe not even under the

233 00:11:39.100 --> 00:11:42.700 same roof under the same corporate umbrella if you will but making

234 00:11:42.700 --> 00:11:46.100 sure that the advisors acting in that quarterback capacity

235 00:11:45.100 --> 00:11:48.700 and has the right Specialists for

236 00:11:48.700 --> 00:11:51.200 those needs that might be outside of the scope of

237 00:11:51.200 --> 00:11:54.700 what the advisors doing on a day-to-day and that could be another point

238 00:11:54.700 --> 00:11:57.300 of reference for a client. If you have an accountant who

239 00:11:57.300 --> 00:12:00.400 you've been working with for a long time and you happen to like him

240 00:12:00.400 --> 00:12:03.800 or her in the way that they work maybe they could be a place

241 00:12:03.800 --> 00:12:05.100 where you could go to get a referral.

242 00:12:05.900 --> 00:12:08.800 Because I'm in all likelihood that that CPA

243 00:12:08.800 --> 00:12:11.600 or that attorney is has some

244 00:12:11.600 --> 00:12:14.400 type of relationship with a financial advisor and could give

245 00:12:14.400 --> 00:12:17.100 you a couple of places to go. Yeah, I think that's a great

246 00:12:17.100 --> 00:12:20.200 great piece of advice there. All right.

247 00:12:20.200 --> 00:12:23.300 I want one more topic here because this comes up a

248 00:12:23.300 --> 00:12:26.800 lot and it's the notion of compensation for financial advisors.

249 00:12:26.800 --> 00:12:29.700 I've heard individuals say

250 00:12:29.700 --> 00:12:32.200 that I don't pay my financial advisor or anything. He does

251 00:12:32.200 --> 00:12:35.100 it for free sure right there is

252 00:12:35.100 --> 00:12:38.200 there's a problem this industry, I think with transparency at times and

253 00:12:38.200 --> 00:12:41.500 there's a number of different ways financial advisors are

254 00:12:41.500 --> 00:12:44.100 being compensated. I didn't like frankly I think advisors should

255 00:12:44.100 --> 00:12:47.300 be fairly compensated. They're doing really good work, right?

256 00:12:49.100 --> 00:12:52.300 Depending on the advisor. Of course, Mike tell us

257 00:12:52.300 --> 00:12:54.500 a little bit about the couple of different.

258 00:12:55.300 --> 00:12:59.000 Fee structures or compensation structures there are for financial advisors.

259 00:12:58.600 --> 00:13:01.800 And if there's one that you would recommend over

260 00:13:01.800 --> 00:13:04.300 another I'll rattle them off because it's a

261 00:13:04.300 --> 00:13:07.100 lot of different ones. There's feel only which we've talked a little

262 00:13:07.100 --> 00:13:09.400 bit about there's fee-based. There's Commission

263 00:13:10.100 --> 00:13:10.900 There's retainer.

264 00:13:11.800 --> 00:13:14.900 There's subscription. There's

265 00:13:14.900 --> 00:13:17.400 another one I've heard that I know is out there not as

266 00:13:17.400 --> 00:13:20.600 popular but it's there and there's flat fee.

267 00:13:20.600 --> 00:13:23.600 So there's a number of different ways that advisors are

268 00:13:23.600 --> 00:13:26.700 compensated and the one

269 00:13:26.700 --> 00:13:29.300 of course in my line of work and in terms

270 00:13:29.300 --> 00:13:32.400 of what I do on a daily basis working with us, I come across primarily

271 00:13:32.400 --> 00:13:35.100 not always I would say fee only

272 00:13:35.100 --> 00:13:38.100 in fee based or the two that that primarily I work with

273 00:13:38.100 --> 00:13:41.300 although there are there are others that are

274 00:13:41.300 --> 00:13:44.100 less. So like a retainer I've seen I've come across that

275 00:13:44.100 --> 00:13:47.400 but I say primarily it's fee only and fee-based that

276 00:13:47.400 --> 00:13:50.000 I typically work with advisors and you know,

277 00:13:50.300 --> 00:13:53.100 I'll let Peter elaborate but I'll just say generally that fee only would be

278 00:13:53.100 --> 00:13:56.100 just be be charging, you know,

279 00:13:56.100 --> 00:13:59.300 a fee for services. It could

280 00:13:59.300 --> 00:14:02.100 be it could be a flat fee or could be a fee based

281 00:14:02.100 --> 00:14:05.400 on assets under management that the investor might have with that advisor

282 00:14:05.400 --> 00:14:08.000 fee base is is kind of

283 00:14:08.300 --> 00:14:11.600 a combination of the only and commission if you will it has

284 00:14:12.100 --> 00:14:16.600 The concept of building on assets but also the advisor

285 00:14:15.600 --> 00:14:19.300 has the ability to offer commission-based

286 00:14:18.300 --> 00:14:22.300 products that would follow outside of the fiduciary scope.

287 00:14:21.300 --> 00:14:24.800 I believe Peter and so those are the two that primarily

288 00:14:24.800 --> 00:14:27.500 I see in my kind of interactions with

289 00:14:27.500 --> 00:14:30.400 advisors around the country. Yeah, I think most of our listeners are

290 00:14:30.400 --> 00:14:33.800 probably falling into the fee only fee-based camp

291 00:14:33.800 --> 00:14:36.500 or the commission side right there. There

292 00:14:36.500 --> 00:14:39.600 are a number of different fee models out there in compensation models

293 00:14:39.600 --> 00:14:42.800 and I think they all have their pros and cons but you

294 00:14:42.800 --> 00:14:45.100 just said something that I'm gonna ask Peter O'Brien on

295 00:14:45.100 --> 00:14:45.300 right?

296 00:14:46.100 --> 00:14:47.600 We talked about fiduciary.

297 00:14:48.500 --> 00:14:50.800 If you are paying a commission.

298 00:14:51.900 --> 00:14:55.200 Is your advisor acting as a fiduciary necessarily? Yeah,

299 00:14:54.200 --> 00:14:57.500 if you've your your fee only your

300 00:14:57.500 --> 00:15:00.200 being charged in a fee for your advice and

301 00:15:00.200 --> 00:15:04.700 and whatever the the Investments would be. Where's fee-based

302 00:15:03.700 --> 00:15:06.400 you could be receiving commissions.

303 00:15:07.400 --> 00:15:10.100 On investment products. It's sort of

304 00:15:10.100 --> 00:15:15.800 I guess I'll use the term hybrid approach. So it's

305 00:15:14.800 --> 00:15:17.800 a gray area. They I don't

306 00:15:17.800 --> 00:15:20.100 know if because we don't do that here, you know,

307 00:15:20.100 --> 00:15:23.600 we don't have commission based investment products. It's strictly

308 00:15:23.600 --> 00:15:26.300 putting people into no load low cost

309 00:15:26.300 --> 00:15:29.100 mutual funds and ETFs and we are being

310 00:15:29.100 --> 00:15:32.300 paid a fee based upon those assets under management. We don't

311 00:15:32.300 --> 00:15:35.500 have commissionable investment products to sell and if

312 00:15:35.500 --> 00:15:38.100 you're if an advisor is doing that.

313 00:15:39.300 --> 00:15:42.200 I don't think they can put themselves out there as

314 00:15:42.200 --> 00:15:43.700 as a fiduciary necessarily.

315 00:15:44.500 --> 00:15:47.800 Yeah, I think that the commission side I'm not

316 00:15:47.800 --> 00:15:50.500 knocking it. Just calling it

317 00:15:50.500 --> 00:15:53.100 what it is. It's it's rot with conflicts of interest and

318 00:15:53.100 --> 00:15:56.500 you just said something that I think would would mean

319 00:15:56.500 --> 00:15:57.500 a lot to our listeners, right?

320 00:15:58.500 --> 00:15:58.800 these

321 00:16:00.600 --> 00:16:03.600 percentage of assets fees paying fees you're paying

322 00:16:03.600 --> 00:16:06.200 for advice in that fee stays the

323 00:16:06.200 --> 00:16:09.900 same regardless of the investment product. It's a

324 00:16:09.900 --> 00:16:12.500 with your charging 1% regardless of

325 00:16:12.500 --> 00:16:15.400 the advice you give you earn five you earn that one percent rather.

326 00:16:16.100 --> 00:16:16.900 commissions

327 00:16:17.800 --> 00:16:20.700 Is in compensation for advice it's compensation

328 00:16:20.700 --> 00:16:23.300 for selling a product and that product

329 00:16:23.300 --> 00:16:26.100 has to be suitable not necessarily best interest.

330 00:16:27.700 --> 00:16:30.500 Okay, so that I think that's something that people

331 00:16:30.500 --> 00:16:34.000 don't understand outside of this industry. You

332 00:16:33.400 --> 00:16:36.300 know, there's two ways two major ways

333 00:16:36.300 --> 00:16:39.200 that advisers get compensated fees versus commissions and

334 00:16:39.200 --> 00:16:42.500 one other point that I'll make about fees and correct

335 00:16:42.500 --> 00:16:45.400 me if I'm wrong gentlemen if you're charging fees on assets.

336 00:16:46.300 --> 00:16:49.600 If the asset level goes up the advisor

337 00:16:49.600 --> 00:16:52.900 gets paid more the asset level goes down. I

338 00:16:52.900 --> 00:16:55.800 mean the percentage stays the same but the actual dollars change, so

339 00:16:55.800 --> 00:16:58.500 I think that it actually aligns the interests.

340 00:16:59.400 --> 00:17:02.500 Of the investor and the advisor using a fee model

341 00:17:02.500 --> 00:17:05.400 for Susan commission model where someone might

342 00:17:05.400 --> 00:17:08.600 be asking you to buy a product that you may not necessarily

343 00:17:08.600 --> 00:17:08.900 need.

344 00:17:10.500 --> 00:17:13.800 Correct. And that's that's the thing. We you

345 00:17:13.800 --> 00:17:14.800 start talking about different.

346 00:17:16.100 --> 00:17:19.700 Whether it's Insurance products investment products that have commissions on

347 00:17:19.700 --> 00:17:20.000 them.

348 00:17:20.700 --> 00:17:23.500 Now all of a sudden it could be suitable. But if product

349 00:17:23.500 --> 00:17:24.600 a May pay

350 00:17:25.300 --> 00:17:28.900 X percentage products B may pay X

351 00:17:28.900 --> 00:17:31.100 percentage plus something on top of

352 00:17:31.100 --> 00:17:31.300 it.

353 00:17:32.700 --> 00:17:35.400 A non-fiduciary advisor is probably

354 00:17:35.400 --> 00:17:38.400 going to go to product B because it's going to pay him

355 00:17:38.400 --> 00:17:41.000 or her more and it's a perceived conflict of

356 00:17:41.400 --> 00:17:44.300 interest. I'm not saying that every person out there who's earning a commission is

357 00:17:45.100 --> 00:17:48.500 Is not acting in good faith, but there

358 00:17:48.500 --> 00:17:51.600 is there's a potential for that conflict to be there. Sure. It's

359 00:17:51.600 --> 00:17:54.900 it's all things being equal right? It's they're gonna pick if it's

360 00:17:54.900 --> 00:17:57.500 if it doesn't necessarily hurt the

361 00:17:57.500 --> 00:18:00.500 client and all and the Investments are relatively the

362 00:18:00.500 --> 00:18:04.100 same they're going to gravitate probably towards the higher commission product.

363 00:18:03.100 --> 00:18:06.400 Not that it's a bad thing. But that's the conflict of

364 00:18:06.400 --> 00:18:09.000 interest that we talk about right isn't necessarily in the best

365 00:18:09.300 --> 00:18:12.600 interest of the client. Yeah, and I think investors don't need products as

366 00:18:12.600 --> 00:18:15.600 much as they need advice. Yeah agreed. I totally agree.

367 00:18:15.600 --> 00:18:18.700 We were talking the the other

368 00:18:18.700 --> 00:18:21.800 day just that the the meetings we were we were at and

369 00:18:21.800 --> 00:18:24.300 and the model the way it was is you

370 00:18:24.300 --> 00:18:27.700 had insurance companies or investment firms sort of

371 00:18:27.700 --> 00:18:30.900 sitting at the top designing product and starting

372 00:18:30.900 --> 00:18:33.400 to push that product down to advisors who would

373 00:18:33.400 --> 00:18:36.300 then push it to clients down at the bottom and really our

374 00:18:36.300 --> 00:18:37.800 model is where we flip the script.

375 00:18:38.600 --> 00:18:41.600 The client is at the top and the client comes to the advisor.

376 00:18:42.200 --> 00:18:45.400 And we then go out to the product manufacturers to

377 00:18:45.400 --> 00:18:48.400 find the the best product the best solution for

378 00:18:48.400 --> 00:18:51.000 for the client to make as part of

379 00:18:51.500 --> 00:18:54.300 their financial plan. So I think that's that's a big difference there.

380 00:18:54.300 --> 00:18:57.600 We have nothing proprietary and we are acting in the best interests

381 00:18:57.600 --> 00:19:00.500 of the client looking for a best of breed approach. And

382 00:19:00.500 --> 00:19:03.600 again, usually it comes down to well, what

383 00:19:03.600 --> 00:19:06.100 are the fees associated with that and that's another great piece of

384 00:19:06.100 --> 00:19:07.000 advice for clients.

385 00:19:08.400 --> 00:19:11.300 Understand who you're paying and what you're paying

386 00:19:11.300 --> 00:19:12.100 them and what for?

387 00:19:12.900 --> 00:19:16.000 Whether it's mutual funds inside your 401k or

388 00:19:15.400 --> 00:19:18.800 something inside if you have an IRA through your bank

389 00:19:18.800 --> 00:19:21.500 understand what it what it is and and

390 00:19:21.500 --> 00:19:24.500 how it works. You're the one paying it and and understand how

391 00:19:24.500 --> 00:19:27.400 all of that works and a lot of times people don't realize

392 00:19:27.400 --> 00:19:30.500 that because a lot of times things are are not

393 00:19:30.500 --> 00:19:33.300 apparent you got to do a got to do a little bit of digging to understand

394 00:19:33.300 --> 00:19:36.500 what those those fees are inside of certain products.

395 00:19:36.500 --> 00:19:39.300 Yeah. Absolutely. No, no what you're paying and I think

396 00:19:39.300 --> 00:19:42.200 that there are some compensation models for

397 00:19:42.200 --> 00:19:45.700 advisor out that they're a little bit opaque if

398 00:19:45.700 --> 00:19:48.600 you will but as an investor

399 00:19:48.600 --> 00:19:51.600 working with the financial professional transparency matters,

400 00:19:51.600 --> 00:19:54.200 and if someone's not being transparent, then there's

401 00:19:54.200 --> 00:19:57.000 probably not a lot of trust there in this business is built on trust.

402 00:19:58.100 --> 00:20:01.300 So yeah, I have to disclose everything to everybody up

403 00:20:01.300 --> 00:20:01.700 front because

404 00:20:03.300 --> 00:20:06.300 It's coming out. It's coming out of the account and they'll see it right on the statement as

405 00:20:06.300 --> 00:20:09.600 a line item to the penny. Yeah, exactly, except a

406 00:20:09.600 --> 00:20:09.700 penny.

407 00:20:10.200 --> 00:20:13.700 Absolutely. Well gentlemen, thank you so much for your time. So I

408 00:20:13.700 --> 00:20:16.400 just want to kind of recap because there was so much great information

409 00:20:16.400 --> 00:20:19.500 that the two of you shared if you're an investor

410 00:20:19.500 --> 00:20:22.300 out there if you're one of our listeners and you're looking to work with a financial

411 00:20:22.300 --> 00:20:25.500 professional or if you're looking for maybe a second opinion a couple

412 00:20:25.500 --> 00:20:28.100 of things that that Peter and Michael had talked to us

413 00:20:28.100 --> 00:20:31.400 about today. Make sure you ask the question. Are you acting

414 00:20:31.400 --> 00:20:34.600 in a fiduciary capacity? Probably the most important question to

415 00:20:34.600 --> 00:20:35.700 ask a financial professional.

416 00:20:36.300 --> 00:20:40.100 Number two. What is your financial planning process? Right

417 00:20:39.100 --> 00:20:42.200 the value proposition of a

418 00:20:42.200 --> 00:20:46.200 financial advisor should be based on that planning process. And

419 00:20:45.200 --> 00:20:48.500 since you are paying for advice, I think a great

420 00:20:48.500 --> 00:20:51.300 question is what is your investment philosophy? How do you see the

421 00:20:51.300 --> 00:20:54.400 world work? How are you going to advise me based on that investment

422 00:20:54.400 --> 00:20:55.200 philosophy

423 00:20:55.900 --> 00:20:58.300 When it comes to credentials, I think looking for any credential

424 00:20:58.300 --> 00:21:01.100 makes a lot of sense after a person's name. But if you're

425 00:21:01.100 --> 00:21:04.100 looking for a true financial planner, the cfp designation is the

426 00:21:04.100 --> 00:21:05.900 one that that our guests recommend.

427 00:21:06.600 --> 00:21:09.400 Look for people that work with people like

428 00:21:09.400 --> 00:21:12.600 you look for advisors that are working with people like yourself

429 00:21:12.600 --> 00:21:15.900 and there's a lot of resources out there. Mike mentioned

430 00:21:15.900 --> 00:21:18.600 Napa. There's the advisor's website. Of

431 00:21:18.600 --> 00:21:21.300 course Facebook LinkedIn are great ways to look at how

432 00:21:21.300 --> 00:21:24.200 these advisors are working with

433 00:21:24.200 --> 00:21:28.200 people that may or may not be like you and let me throw another resource

434 00:21:27.200 --> 00:21:31.200 out there. A lot of investors don't realize that you

435 00:21:30.200 --> 00:21:34.300 can Google broker check broker check

436 00:21:34.300 --> 00:21:38.000 is a government website where tracks the history

437 00:21:37.100 --> 00:21:41.000 of every single Financial professional whether they're SEC

438 00:21:40.600 --> 00:21:43.900 registered or member of finra and you'll

439 00:21:43.900 --> 00:21:46.400 see if there's any disclosures or anything like that

440 00:21:46.400 --> 00:21:49.400 so broker checks are great way to see if

441 00:21:49.400 --> 00:21:52.200 if there's any dings on the record of

442 00:21:52.200 --> 00:21:55.100 the person that you're speaking to and then in terms

443 00:21:55.100 --> 00:21:58.700 of compensation look for fees versus commissions not

444 00:21:58.700 --> 00:22:01.200 to say that commissions are necessarily bad, but they

445 00:22:01.200 --> 00:22:04.100 there could be some conflicts of

446 00:22:04.100 --> 00:22:06.500 interest in there and a fee-based advisor.

447 00:22:06.600 --> 00:22:09.200 Even a fee only advisor is going to sit in the same side of

448 00:22:09.200 --> 00:22:12.700 the table as you the investor. So Michael, thank

449 00:22:12.700 --> 00:22:15.200 you so much for your time. Thanks Tom Peter. So thank you

450 00:22:15.200 --> 00:22:19.100 for joining us here today. This has been a great conversation and so

451 00:22:18.100 --> 00:22:21.300 for our listeners out there. Thank you for joining us.

452 00:22:21.300 --> 00:22:24.200 We'll get you on the next one. And if you

453 00:22:24.200 --> 00:22:28.400 want to look at any of our previous unfiltered Finance podcasts, they're

454 00:22:27.400 --> 00:22:30.600 available wherever you might be getting your podcast today.

455 00:22:30.600 --> 00:22:34.200 So thank you till next time. Bye Cemetery Partners.

456 00:22:33.200 --> 00:22:36.600 LLC is an investment advisor

457 00:22:36.600 --> 00:22:39.300 firm registered with the Security and Exchange Commission

458 00:22:39.300 --> 00:22:42.500 The Firm only transacts business in states where

459 00:22:42.500 --> 00:22:45.600 it is properly registered or excluded or

460 00:22:45.600 --> 00:22:49.200 Exempted from registration requirements registration of

461 00:22:48.200 --> 00:22:51.400 an investment advisor does not imply

462 00:22:51.400 --> 00:22:54.500 any specific level of skill or training and does

463 00:22:54.500 --> 00:22:57.300 not constitute an endorsement of the firm by the

464 00:22:57.300 --> 00:23:00.300 commission. No one should assume that future performance of any

465 00:23:00.300 --> 00:23:04.400 specific investment investment strategy product or

466 00:23:03.400 --> 00:23:06.100 non-investment related content.

467 00:23:06.600 --> 00:23:10.000 Reference to directly or indirectly in this material will be

468 00:23:09.000 --> 00:23:10.500 profitable.

469 00:23:11.400 --> 00:23:14.300 As with any investment strategy there is the possibility

470 00:23:14.300 --> 00:23:17.500 of profitability as well as loss due

471 00:23:17.500 --> 00:23:20.200 to various factors including changing market

472 00:23:20.200 --> 00:23:22.600 conditions and/or applicable laws.

473 00:23:23.400 --> 00:23:27.000 Content may not be reflective of current opinions or

474 00:23:26.600 --> 00:23:29.600 positions. Please note the material

475 00:23:29.600 --> 00:23:32.300 is provided for educational and background use only

476 00:23:32.300 --> 00:23:36.000 moreover. You should not assume that any discussion or information

477 00:23:35.700 --> 00:23:38.600 contained in this material serves as

478 00:23:38.600 --> 00:23:42.400 the receipt of or as a substitute for personalized

479 00:23:41.400 --> 00:23:43.700 investment advice.