Lots of people are interested in your money. The bank likes your deposit. The waiter appreciates your tip. The carpenter values your payment. But who really cares about your money, besides you and your family? When you get to that point of engaging professionals with your money, what should you look for and how can you tell how much they care?
Today, you can go a fair distance in life before people know about your money. Early on your financial identity exists mostly through web sites and data entry. It starts with your checking accounts, then credit cards. There may be an online savings account or 401k. The first people who know about your money may be a CPA as you pay more in taxes, and perhaps a mortgage broker as you borrow money to buy a home. Still, not much human contact and very little care.
At some point you accumulate enough financial assets that they attract attention. You may have spent less than you earned for years, contributed faithfully to your 401(k) for years, or own a stake in a private company about to monetize. As the dollar figures grow, it’s time to engage more professionals, carefully.
Because you care about your financial future, you are right to raise questions and make statements like these:
Some paths to investment success are clearly more effective than others. Using care as a filter is a great way to identify them. A fiduciary (registered investment advisor) has to care, it comes with the job. Some investments show care through low fees and transparency. For instance, the passive power of index ETFs often puts you in the top tier immediately simply because you keep more of what you make. How much more? The amount of the fees you don’t pay for active management and the taxes they generate.
Care is not a hard thing to measure or demonstrate when it comes to your money. You can ask your investment advisor or broker for proof. Ask questions. Who is managing my money? How? Show me in writing. How is this portfolio unique to me? How do you get paid and by whom? And so on. Challenge answers that sound like marketing hype.
We suggest you add one more question — Why aren’t you indexing for me? — if you really want a good and caring discussion.
John Osbon – email@example.com