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CHAPTER 1

be excellent funds, but there may be other, similar funds that are bet- ter suited for you.

DoesYour Advisor KnowYou Financially? Have you been asked to show your tax return to your advisor? Is he or she in contact with your CPA? Does your advisor ask about your 401(k) at work? A good financial advisor needs to know everything about your financial life. If your 401(k) at work is heavily weighted in technology stocks and stock funds, your portfolio with your advi- sor shouldn’t be. Make sure your advisor knows everything he or she needs to know in order to make the best possible recommendations to you. If your advisor doesn’t seem to care, or isn’t listening when you bring it up, it’s time to find someone else who will.

Who AreYou MakingYour Checks Out To? There are always stories in the newspapers about unknowing clients getting bilked out of thousands, even millions, of dollars by some financial advisor. Always be sure that you are writing your checks out properly. For payment of consultation fees, it’s okay to write a check directly to your advisor. If the advisor works as an indepen- dent, then it may be alright to write the check out to him or her per- sonally. However, if the advisor is the agent of a registered investment firm, then do not make your check payable to the advisor personally.

Who ControlsYour Portfolio? Some firms allow what is called discretionary power. This means that if you consent, your advisor can make moves within your port- folio without consulting you. For some clients, this is exactly what they want, and they are willing to take the risk associated with hav- ing a discretionary account. For most, though, discretionary power is a problem.

A few months ago, I had a man come meet with me for the first time. He was unhappy with the performance of some of his accounts at another firm. He asked that we transfer his assets so that I could be his advisor. This man was out of the country quite a bit for business, and had given his advisor at the other firm discretionary control over

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