You should expect no less than terrific service from your Investment Advisor. The process should look like this:
1) Retirement savings/income projection - Every investor, regardless of age or net worth, should have a written financial plan. For pre-retirees, the plan should project required retirement income and indicate how much must be invested annually to arrive at the portfolio value that will provide that income. For retirees, the plan should list all sources of income, including pensions and withdrawals from investments, and the value of the investment portfolio over the years based on those withdrawals. Your investment advisor should meet with you annually to review the plan (or more often if major changes have occurred) and ensure you are on track to meet your goals.
2) Investment Policy Statement (IPS) - From the financial plan, a target rate of return is established, considering your investment objectives, risk tolerance and current portfolio value in relation to the ultimate goal. The IPS should be reviewed and signed at the annual meeting.
3) Build and monitor a portfolio - Once the investment guidelines have been established, your advisor should explain and implement the process of building an investment portfolio specific to your goals and objectives. The content of your portfolio will vary, depending on where you do business. In my case, as a portfolio manager, I invest, primarily, in shares of companies which I determine have potential for growth, pay generous dividends and can be purchased under calculated fair value, in corporate and government bonds and high-yield preferred shares. I build client portfolios over time, as the right opportunities arise, taking into account current macro economic issues, the outlook for equities and my client’s personal situation. Be sure to understand the strategy being used by your advisor and ask to be informed if the strategy changes.
4) Reporting - You should always know the rate of return and fee structure of your investment portfolio. Ask for a regular update on performance, at least semi-annually. That is the only way to ensure, with any accuracy, that you are on track to reach your financial goals.
Failure on the part of your advisor to offer any of the above services should cause concern. Ask for a meeting to discuss the issue. If you feel your concerns have not been resolved, consider shopping around for a new advisor. You worked hard for your money and deserve good service in its long-term management.
David Deacon is a Portfolio Manager with Raymond James Ltd. The views of the author do not necessarily reflect those of Raymond James. This article is for information purposes only.