Toucan Talk
How To Pick A Financial Advisor
Provided by Michael mjo@teamoana.com

Michael Oana is the Chief Investment Officer with Team Oana Investment Advisors. Team Oana is a locally owned boutique investment firm specializing in helping conservative investors. Mr. Oana's Toucan Talk column appears bi- weekly in TheColumbiaStar.

In a bull market, most investors love their advisors. For the most part, investments are going up, and all is right with the world. Investment performance takes a back seat to intangibles - things like "personality" or "service."

But when a bear market rolls in like a blast of winter air, opinions change sharply. All of a sudden, performance means everything.

Successfully selecting an advisor isn't an exact science. Rather, it's a combination of demeanor, responsiveness, and results- and the right mix is determined by you.

So how do you decide on the right financial advisor? While there's no precise formula, there are issues you can examine to determine your level of comfort. By honestly answering some basic questions, you can come to a better understanding of how satisfied you are with your brokerage relationship.

Integrity

The first issue you should consider is whether you trust your financial advisor. If you don't, the decision's easy - get a new one. Without trust, nothing else matters.

If you don't trust your financial advisor, you can't be sure you're getting objective advice and investment counsel. Do you believe what your advisor tells you? Or do you feel that crucial information is being withheld, the potential of investment recommendations is being overstated, or you're being deceived? If so, move on. You should be better off.

Does your advisor seem to have your best interests at heart? Of course, advisors can't afford to ignore their own interests. However, you should feel secure that you're working with someone genuinely dedicated to your success.

Here's another test: has your advisor ever tried to talk you out of a trade instead of taking the easy commission?

How your financial advisor handles bad news is important, too. For example, when an investment loses money, does your advisor call you about it? You need a guide who will give you an honest assessment of the situation. All financial advisors make mistakes. Good financial advisors own up to them.

Chemistry

Another absolute necessity: you have to develop a rapport. Otherwise, the relationship is bound to be short. Why deal with someone you don't like? Do you hesitate to call when you need advice?

If you're comfortable, confident, and at ease - if you enjoy doing business with your advisor - you're on the right track. You don't even have to know what you like about your financial advisor, only that you do.

Is your advisor happy to hear from you when you do call? Do you feel a "we're in this together" camaraderie? If so, congratulations.

Responsiveness

When you ask your advisor for material or information, do you get it? Are your calls returned?

When you have money to invest, does your advisor call with ideas and suggestions? When there is important news about your investments, do you hear about it from your advisor before you read it in the paper?

Is your advisor there when you call? Does your advisor call you to advise that you should sell? When trades are executed, to tell you the price? Does your advisor take personal responsibility for seeing that your questions are answered and your problems solved?

Each year, does your advisor review your investments with you? Do you receive research when it's appropriate?

Service problems usually lead to more lost accounts than performance problems. All of these areas and more add up to good service. You deserve it - you should expect it.

Understanding

Does your advisor listen? Does he or she take the time to determine your needs?

Does your advisor ask good questions? Listen to your needs and respond accordingly? Take the time to find out what your objectives are, and your tolerance of risk?

A good advisor shouldn't make a recommendation without first determining your objectives. Since most clients aren't adept at expressing needs, it takes skill to get information. You need an advisor with this attentiveness to be well-served.

Knowledge and Results

Most important, you should have an advisor with demonstrated knowledge, familiarity with various types of investments, and a track record of performance.

If your main interest is stocks, you certainly want an advisor who watches the day-to-day movements of the market. But you also want someone who can give you advice on the way the market is going longterm. Similarly, if you're interested in bonds, you want an advisor who deals in them regularly and can give an opinion on the bond market's direction.

When you pay a full-service advisor a fee or commission, you expect quality advice. If you find that you have to do most of the research yourself, and your advisor is having a difficult time answering your questions about a specific area of investing, perhaps you should look elsewhere.

These days, with all the uncertainty in the marketplace, it pays to be aware of the true, dollars-and-cents value of the advice you receive from your advisor: investment performance. Examine how the investments your advisor has recommended have done overall. How much money has your advisor made for you? Would you have done better with your money in the bank? If so, it may be time to get another advisor.

There's an even more revealing question. Are you achieving your investment objectives? Be fair. If your stated objective is to earn 8 percent in tax-free income, and you have, then you should be pleased--even if you could have made more money by assuming greater risk. If the market is down and your stocks are down with it, it's not necessarily your advisor's fault. But if your stocks are down consistently, you may need new advice.

All of these things, taken together should help you select an advisor in times of uncertainty. In fact, they can help you anytime. There's no magic to it - just common sense.

The accuracy and completeness of this article are not guaranteed. The opinions expressed are those of the author(s) and are not necessarily those of our firm or its affiliates. The material is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.

Our firm does not provide tax or legal advice. Please consult with your tax advisor before taking any action that may have tax consequences.

Team OanaInvestment Advisors, Inc., is an independent company with securities offered through Summit BrokerageServices, Inc.Member FINRA&SIPC.

Please listen in on the "U Need 2 Know" radio show on WOIC 1230 AM. Mr. Oana will be a guest every third Wednesday of each month at 3:05 to 3:25 pm. Looking for a great guest speaker for your next event? Please call Staci Goins at 803-343-3343 to schedule Mr. Oana to speak for your group.