When you’re ready to level up your financial life, consider working with a financial advisor. Bringing in an expert isn’t just for the high-net-worth crowd; financial advisors work with clients at all levels. A good advisor will keep an eye on market fluctuations and might suggest products you are not familiar with such as exchange traded funds or bonds. They will also steer you toward long-term financial security, educate you on new products and terminology, and take a big-picture look at your life—whether you’re buying a first home, saving for college, or looking at retirement. They’ll ask about your credit card debt, look at your tax returns, and dig into your estate planning.
“People used to need a financial advisor because there was so little information,” says Ridgefield-based Joseph DiVestea, Managing Director, Senior Vice President Investments, DiVestea Wealth Partners of Raymond James. Today, there are too many options. New products arise, others become obsolete. “Hiring a financial professional,” he says, “assures you’re not sticking with outdated investment models.”
The level of trust and transparency necessary in an advisor-client relationship can be uncomfortable, since you’re basically trusting your life savings to a relative stranger. “It doesn’t have to be,” says Allen Purkiss, founder of Purkiss Capital Advisors in Ridgefield. Start by asking around — your friends, your accountant, your lawyer. Look at reliable online sources (which does not include typing ‘good financial advisor near me’ in your search bar). “The Certified Financial Planner site (cfp.net) has a ‘find an advisor’ section,” says Purkiss, “as does the National Association of Personal Financial Advisors (napfa.org). For both, plug in your zip code and see who’s nearby.” Have a sense of what you’re looking for: big returns, hot investment opportunities, or long-term portfolio management. Make preliminary appointments with at least three advisors, both DiVestea and Purkiss advise. Ask about fee structures and how they develop their plans.
“In-person meetings are crucial,” says Purkiss. “You want to get the feeling that this is someone you want to work with. Trust your instincts.”
“You’re going to have to work with them when the markets are going through difficult times,” Purkiss adds. “It’s easy when the market just goes up and up. But when the market gets difficult, you want the right people working for you.”
“You want to understand the process they use to derive their recommendations, as well as how they’re compensated,” says DiVestea. “Transparency is critical. The best investments align with your goals, risk tolerance, and time horizon.” DiVestea’s new clients get a written proposal and in-person review, so the plan is clear and the jargon of the financial world – ETFs, index funds, options – makes sense. “You want an advisor who is patient enough to educate you.’”
There are three ways financial advisors get paid: fee-only, fee-based (fee plus commission), and commission. “Fee-only is pretty clear,” says Purkiss. “The fee is written in the contract, and there are no hidden commissions.” Some advisors charge a flat fee, while others charge a percentage based on Assets Under Management (AUM). Purkiss explains that many clients like the fact that if the portfolio value drops, so does the fee. Commission means the advisor takes a portion of every transaction made for you. “I think the fairest way is AUM or fee-only,” says DiVestea. “The advisor is on the same side of the table as the client. The percentages charged are usually less as the size of the portfolio goes up. For example, on an account with $1 million under management, the average fee would be about 1%.” Many institutions have brought stock commissions down by offering discount brokerage trading, so advisors using the commission-fee model have to show their value to stock-pick and manage funds.”
For more information, reach out to Allen Purkiss at Purkiss Capital Advisors LLC, allen@pcapadvisors.com or Joe DiVestea of DiVestea Wealth, Partners of Raymond James, at joseph.divestea@raymondjames.com.•
Diclaimer:
Raymond James & Associates, Inc., member New York Stock Exchange/SIPC.
Any opinions are those of Joe DiVestea and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
In a fee-based account clients pay a quarterly fee, based on the level of assets in the account, for the services of a financial advisor as part of an advisory relationship. In deciding to pay a fee rather than commissions, clients should understand that the fee may be higher than a commission alternative during periods of lower trading. Advisory fees are in addition to the internal expenses charged by mutual funds and other investment company securities. To the extent that clients intend to hold these securities, the internal expenses should be included when evaluating the costs of a fee-based account. Clients should periodically re-evaluate whether the use of an asset-based fee continues to be appropriate in servicing their needs. A list of additional considerations, as well as the fee schedule, is available in the firm’s Form ADV Part II as well as the client agreement.
