In our third episode,  RJ King of D Business Magazine asks Lou Melone of Melone Private Wealth how to choose a financial advisor.

The relationship is important from both sides, and Lou explains the difference between a "customer" and a "client."

From the investor perspective, think of it as a four step process:

1. Think of the person or team who will advise you
2. Think of the type of company they work at.
3. Understand how the advisor is compensated
4. What is their planning strategy?

There's a veritable alphabet soup of financial designations, and Lou tells the story of "chauffeur knowledge" vs. "Planck knowledge" (link below).

Lou breaks down four of the main financial designations:  CHFC, CFA, CIMA, and CFP.  When it comes to choosing an advisor, the Certified Financial Planning Board recommends asking 10 questions, which we explain.

There is a very big difference between asset management and comprehensive planning.  And due to certain rules and regulations, an asset manager can appear to be a comprehensive planner - even when they are not.  This is why it's important to do your research and ask questions.   This includes learning about the fiduciary standard.

RJ also asks Lou about big Wall Street brokerage houses, and if there is still an advantage to using a larger firm over a smaller one.   Also, should an investor consider some Do-It-Yourself online tools?

We cover costs and fees and the different ways financial advisors are paid.  Lou talks about the differences, and why they are crucial to understand.

Finally, what is the value of a financial planner?  Lou cites articles from Vanguard and Russell Investments that quantify how important it can be to work with a planner - and why.

In our next episode, Lou and RJ will cover how to build a portfolio for retirement that matches your financial plan.

Resources:

Lou Melone's book, "Unpack Your Financial Baggage:" https://www.amazon.com/Unpack-Your-Financial-Baggage-Misconceptions/dp/1948237776

Melone Private Wealth Website: https://www.meloneprivatewealth.com/

D Business Magazine Website: https://www.dbusiness.com/

Mentioned in this episode:

Lou's article on the Alphabet Soup of Credentials and "Chauffeur Knowledge:" https://www.meloneprivatewealth.com/blog/alphabet-soup-of-credential-and-chauffeur-knowledge

Charlie Monger's USC Commencement Address: https://jamesclear.com/great-speeches/2007-usc-law-school-commencement-address-by-charlie-munger

Ron Rhoades article in Think Advisor: https://www.thinkadvisor.com/2019/06/21/ron-rhoades-sec-reg-bi-is-greatest-securities-fraud-in-history/

Russell Investments Value of an Advisor: https://russellinvestments.com/us/resources/financial-professionals/value-of-advisor

Vanguard Value of an Advisor:https://advisors.vanguard.com/insights/article/IWE_ResPuttingAValueOnValue