by Jack Waymire
Your biggest financial risk is not the volatility of the stock market. It is bad financial advice when you invest in the stock market. Therefore, your biggest financial risk is selecting the wrong advisor.
Financial advisors do not have track records that document past performance. In fact, there is very little public data that helps you determine the quality of advisors and firms before you select them.
Paladin is the only Securities and Exchange Commission registered firm that vets, rates, and validates the quality of financial advisors and firms for investors.
Paladin wrote the book on selecting top quality advisors: Who’s Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor (Wiley, 2003).
5 Frequent Mistakes
A high percentage of investors make five major mistakes when they select financial advisors and firms. They:
- Let advisors control the data they rely on to make decisions
- Select advisors with the best sales pitches and claims
- Believe advisors at brand name firms are safer choices
- Select the advisors they like the best
- Do not validate the accuracy of advisor information
Paladin due diligence focuses on data that impacts advisor competence, trustworthiness, and results:
- Credentials: Degrees, Experience, Certifications
- Ethics: Compliance Record, Fiduciary Status
- Business Practices: Compensation, Accessibility
- Services: Planning, Investment, Insurance, Tax, Legal
5 Star Quality Rating
Paladin uses a proprietary algorithm to produce quality ratings for advisors and firms.
- A 5 Star quality rating is a minimum requirement to be listed in Paladin’s Registry
- The rating means the advisor or firm scored in the 90th percentile or higher
- 75% of advisors cannot meet Paladin’s minimum requirements
- Less than 10% of advisors who submit data achieve 5 Star quality ratings
Paladin surveys show it pays to trust what you see, not what you hear, when you select a financial advisor or firm. All too often, what you hear is a very convincing sales pitch. Paladin provides research reports that document advisor responses so you have a permanent record.
Other posts from Jack Waymire
How often have you heard the expression, “You need to spend money to make money?” Usually reserved for...
What you should be asking yourself—and your advisor—while evaluating your portfolio’s 2016 performance. The end of 2016 brought...
Read this timely article if you are planning to change financial advisors or select your first advisor in...