Millions of investors rely on financial advisors to help them invest their retirement assets. Some investors are just getting starting accumulating assets for retirement while others are currently retired. This creates a substantial range in investor experiences, but all investors should ask their advisors these questions.
There is an old saying when you rely on financial advisors to invest your retirement assets: “You pay advisors for foresight and judge their results with hindsight”. You have the benefit of hindsight to judge the quality of your 2013 investment returns. This information can help you improve your 2014 results while reducing your exposure to excessive risk and expense.
Don’t assume, because the market had a great year, you also had a great year. Yes, your assets were up in value, but were you rewarded for the risk you were exposed to? Did you beat or lag the market? Did you pay excessive expenses for the results you received? Did your financial advisor meet all of your expectations?
Your financial advisor should be willing to document his responses to the following questions so you have a written record.
Top Ten Questions for 2013
The past twelve months have been great for investors who allocated a significant percentage of their assets to the stock market. Bond market investments were a different story. The more money you had invested in the stock market the higher your returns should be.
1. What was my gross rate of return for 2013?
2. What was my net rate of return for 2013?
3. What is a reasonable benchmark that provides a valid comparison for my performance?
4. How much risk were my assets exposed to? More risk than the stock market, the same risk as the stock market, or less risk than the stock market?
5. Was I rewarded for the amount of risk you exposed me to? For example, if my investment recommendations were riskier than the market, did my net results exceed the market’s rate of return?
6. What were my total expenses for 2013? Total expenses would be all monies that were deducted from all of my accounts.
7. Who received the monies, how much did they receive, and what services did I receive for the money I paid?
8. What was your best investment recommendation for 2013?
9. What was your worst investment recommendation for 2013?
10. What action did you take to correct your worst investment recommendation?