The Investor Coach, Your Financial Co-Pilot

If anything happens to you, your family has someone to consult.

If you weren’t around, what would happen to your investments? In many families, one person handles investment decisions, and spouses or children have little comprehension of what happens each week, month or year with a portfolio.

In an emergency, this lack of knowledge can become financially paralyzing. Just as small business owners risk problems by “keeping it all in their heads,” families risk problems when only one person has an understanding of investments.

This is why a trusted relationship with a Investor Coach can be so vital. If the primary individual handling investment and portfolio management responsibilities in a family passes away, the family has a professional to consult – not a stranger they have to explain their priorities to at length, but someone who has built a bond with mom or dad and perhaps their adult children.

You want a coach who can play a fiduciary role. Look for an advisor who upholds a fiduciary standard. Advisors who build their businesses on a fiduciary standard tend to work on fees. Other financial services industry professionals earn much of their compensation from commissions linked to trades or product sales.

Commission-based financial professionals don’t necessarily have to abide by a fiduciary standard. Sometimes, only a suitability standard must be met. The difference may seem minor, but it really isn’t. The suitability standard, which hails back to the days of cold-calling stock brokers, dictates that you should recommend investments that are “suitable” to a client. Think about the leeway that can potentially provide to a commission-based advisor. In contrast, an investor coach working by a fiduciary standard has an ethical requirement to act in a client’s best interest at all times, and to recommend investments or products that clearly correspond to that best interest. The client comes first.

You want an advisor who looks out for you. The best advisors earn trust through their character, ability and candor. In handling portfolios for myriad clients, they have learned to watch for certain concerns, and to be aware of certain issues that may get in the way of wealth building or wealth retention.

Take account and fund fees, for example. These can subtly eat into retirement savings. According to Investment Company Institute research, annual expense ratios of stock funds averaged 0.77% in 2012. So why do many investors endure annual fund fees well above 1%? (The typical equity mutual fund charges an investor 1.3-1.5% a year, not including the cost of turnover). An advisor acting in your best interest could alert you to egregious fees and work with you to find alternatives.1,2

Many investors have built impressive and varied portfolios but lack long-term wealth management strategies. Money has been made, but little attention has been given to tax efficiency or risk exposure.

As you near retirement age, playing defense becomes more and more important. A trusted Investor Coach could help you determine a risk and tax management approach with the potential to preserve your portfolio assets and your estate.

Your family will want nothing less. With a skilled Investor Coach around to act as a “co-pilot” for your portfolio, your loved ones have someone to contact should the unexpected happen. When you have a coach who can step up and play a fiduciary role for you today and tomorrow, you have a professional whose service and guidance can potentially add value to your financial life.

If you’re the family member in charge of investments and crucial financial matters, don’t let that knowledge disappear at your passing. A will or a trust can transfer assets, but not the acumen by which they have been accumulated. A relationship with a trusted Investor Coach may help to convey it to others.

Citations.
1 – forbes.com/sites/johnwasik/2013/06/27/why-mutual-fund-fees-are-too-high/ [6/27/13]
2 – investopedia.com/university/mutualfunds/mutualfunds2.asp [12/5/13]

This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by MarketingLibrary.Net Inc., for Mark Lund, The 401k Advisor, Investor Coach and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm providing 401k consulting for small businesses and private investment advisory services for select individuals. Stonecreek is located in Salt Lake City and Provo Utah.

Category: Blog, Newsletters