Understanding Fiduciary Standards: Financial Planning (Part 2)

September 2016

Once you have engaged the financial advisors of your choice, based on some of the criteria I outlined in Part 1, here is a nine-point checklist to gauge whether your financial advisors are earning their fees.

  1. They care more about you and your money than anyone who doesn’t share your last name.
  2. They continually confirm that they understand your needs and objectives.
  3. They routinely offer to help you understand the present status of your portfolio
  4. They follow a written investment plan created when you began. It should:
  • Give specific spending guidance for retirement
  • Be continually updated to reflect changing markets and circumstances
  • Be reviewed with you to ensure you understand and are comfortable with any changes in your spending goals
  • They maintain the latest, state-of-the-art software to track your spending, and use it to focus on keeping your budget organized.
  1. They created a written investment policy statement when you started, to clearly show that they understand the level of risk you are comfortable with while pursuing your financial goals. It also states where you have agreed you want to invest and in what amounts.
  2. They are willing to help you study possible alternatives that could meet your goals as well as creative solutions you may not have considered.
  3. They have also planned for your children and grandchildren’s college expenses using tax-advantaged plans such as 529 plans.
  4. They encourage you to consider areas of your financial life that you haven’t thought about:
  • Can life insurance provide continued income security to your family in the event of your death?
  • Will long-term care insurance provide the funds needed to keep performing your daily functions in the event you are not able to do so?
  • If you become disabled and are unable to work, can disability insurance provide income replacement?
  • How can you organize your estate so that your wishes are carried out? Who would you choose as your successor trustees? These might be discussed in hosted family meetings so that your heirs clearly understand your intentions.

In Part 3, I will address investment categories, strategies and cautions.