Do You Know What You’ve Invested In?

I can’t tell you how many times I’ve had people say something to me along the lines of this:  “I’m not really sure what I’m invested in”…yikes!

Now, not everyone wants to know what they are invested in, but that’s different from at least understanding the basics about the investments you hold and why you hold them.  This also does not excuse the financial advisor from making sure his/her clients get the proper disclosures on the types of investments held (must cover the risks associated with the different types of investments).

It is a financial advisor’s responsibility to educate his/her clients so that they feel comfortable AND understand how the investments will help them reach their goals.  If your financial advisor doesn’t educate you, keeps you in the dark about your investments, and/or has you investing in things that are more risky or complicated than is appropriate for your situation, chances are you need to find a “true” financial advisor who has your best interests in mind (fiduciary).

I know many clients who say that they don’t have time to read a mutual fund prospectus or would care to, but I always tell them the pluses and minuses to holding each type of investment.  I also tell prospective clients when I see investments that don’t seem to be right for their particular situation (ex: inverse and multiplier ETFs) that they should probably reconsider having those investments and/or working with that financial advisor.  This is especially true if the progress towards financial goals is not happening, clearly indicating a problem with the investment mix.

  • Do you know why you are invested in the manner that you are currently?
  • Has your advisor gone over this with you?
  • Are your financial goals clearly defined, and are you making progress towards them?
  • Do you have an investment policy statement for your financial situation, and do you review that with your financial advisor on a regular basis?

If you answered “no” to any of these questions, either get clarification from your current financial advisor or start looking for a financial advisor who truly has your best interests at heart.

Find an experienced financial advisor who deals with different types of quality investments on a regular basis, works for an RIA firm, earns his/her money from fees (NOT commissions), believes in having an abundance of investment choices for clients, and has the heart & demeanor of a teacher, NOT a salesman, and chances are you’ve found the right financial advisor to help you prepare and plan for your financial goals.

To learn more about Martin Federici, view his Paladin Registry profile.  

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