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Interview Questions for Money Managers

April 15th, 2013

In light of the Madoff case, I am often asked what types of questions a person should ask his or her money manger to ensure that person is working for the client. So, here they are: Your First Meeting with a Money Manager Here are the questions you will want to answer as you go
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When in Doubt about a Money Manager

April 15th, 2013

Consider whether hiring a private money manager really is the best idea for you. Yes, there can be performance and tax advantages, but maintaining control, working with financial planners and brokers, staying involved in the process and using mutual funds–which are much more tightly controlled–may still give you the highest sleep factor, and no amount
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What Is a “Separate Account” with a Money Manager?

April 15th, 2013

Most times, if you are hiring a money manager, it is to run something called a “separate account.” It is “separate” from other pooled monies, such as mutual funds and hedge funds, and is instead managed to the owner’s general specifications. Separate accounts differ from traditional funds because you, the investor, will own the securities
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Madoff’s Gift to Investors

April 15th, 2013

For all of the pain Madoff caused, he left others with a lasting legacy, namely the importance of doing your due diligence and looking for the red flags in the relationship. His case personified many of the things that any investors considering a money manager should have worried about all along; now, they’re aware of
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Finding Money Manager Candidates

April 15th, 2013

You’re not going to want to go dialing for dollars or using a referral service here; instead, you may be introduced to a money manager by a current advisor, or you will find one by looking at a database that looks at performance, such as Morningstar Inc., the Chicago research firm known for its ratings
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Interviewing a Money Manager

April 15th, 2013

Financial planners can act as money managers. Brokers can, too. The guys who run your mutual funds are money managers. Hedge fund managers, guys who trade “separate accounts,” and virtually anyone who promises to oversee your investment capital are money managers. In fact, so long as you follow a few regulatory rules, you could hang
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Intuition Is Important; Greed Is Not

April 12th, 2013

Ideally, you’d like to be able to introduce your broker to your children one day as “the person who helped us reach our goals.” For all of the questions, background checks, and concerns, there will be no substitute for your sense that the advisor can deliver on that potential. Do what you can to get
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What if My Broker Changes Firms?

April 12th, 2013

There are many reasons why brokers switch firms. It’s a normal part of the business, but you will want to know why. I once met a couple whose broker was changing firms for the second time in three years, moving from a national firm to a regional one. They worried about the small firm but
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Building the Relationship with Your Broker

April 12th, 2013

There’s an old saying that the best way to get good market information is to “take a broker to lunch.” It’s not far from the truth. The best way to develop a relationship with a broker is to be able to talk about money and investing when there is no commission on the line and
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Interview Questions for Brokers

April 12th, 2013

With brokers, you have an initial interview and then subsequent mini-interviews whenever you discuss making additional investments or changing your portfolio. The first interview should define the relationship and establish your comfort level with the broker; the other is part of ongoing maintenance and is designed to keep you informed, the broker honest, and the
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Important Credentials For Brokers

April 12th, 2013

Brokers sometimes pursue the same credentials of a financial planner. Like a planner, however, no credentials are necessary. A broker, however, must pass exams in order to practice, the basic tests being known as “Series 6″ and “Series 7″ exams. Those will not necessarily be much help when it comes to lifetime financial advice, since
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How Do Broker Fees and Payment Plans Work?

April 12th, 2013

Unless he or she charges an asset-management fee—meaning he or she takes a slice of the assets managed each year—or a flat fee for account management (as in the “cash-management accounts” common to many brokerage firms), you should expect any broker you meet to be paid on commission. It’s not always easy to figure out
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Checking out Broker Candidates

April 12th, 2013

Stockbrokers typically file a Form U-4 to register with the Financial Industry Regulatory Agency (FINRA), which covers the details on the advisor’s past. As this book was going to press, FINRA had proposed stepped-up disclosure requirements that would make it easier to discern when a broker had committed violations of securities law or had disciplinary
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Do Name Brands Matter with Brokers?

April 12th, 2013

It is more important to have a broker who is expert at what he or she does than to have someone who is affiliated with a national wirehouse like Merrill Lynch, Morgan Stanley, or the other big names. Yes, the big names have access to their own big stable of researchers and may sell exclusive
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How to Determine if a Broker is Suitable for Your Needs

April 12th, 2013

The broker functions like a salesman but, unlike someone pushing vacuum cleaners or refrigerators, simply persuading you to write a check does not legally constitute doing his job. Brokers have a legal responsibility to make sure that each and every recommendation they make is suitable for you, your financial circumstances, goals and objectives, and level
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What to Expect from a Broker

April 12th, 2013

The traditional broker is a “full-service broker.” As the name implies, this is someone who can handle all manner of transactions and provide information to guide your investment choices. Technically, if he is a broker, he is selling you products and services, rather than selling you advice. That said, many full-service brokers go by other
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Interviewing a Broker

April 12th, 2013

Oscar Wilde’s assessment of stockbrokers stems from the many decades when the brokerage business was less than civilized, a mysterious, dangerous place that most individuals didn’t understand. It was the Wild West, where the good guys and bad guys were hard to tell apart, but impossible to avoid because they were the only ones with
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Don’t Ignore Your Gut when Picking a Financial Advisor

April 12th, 2013

As much as it is about weeding out the bad guys and the poor fits, you should go into your search confident that the vast majority of advisors are fair, competent, honest, and anxious to do the right thing. That’s why choosing a planner is like mixing art and science. The science is the investment
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Future Considerations after Selecting a Financial Advisor

April 12th, 2013

Planners sometimes change firms, and that leaves you trying to decide whether you want to go with them. Truth be told, it depends on the circumstances and on what you expect to happen if you stay or go. Start by asking your advisor about the reasons for the change. If she is moving from one
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Building the Relationship with a Financial Advisor

April 12th, 2013

Whether an advisor is a regular partner in your financial decisions or just someone you turn to for a checkup and fine-tuning of your own strategy, you will be best served by building a relationship over time. That means calling with questions and concerns, arranging the occasional meeting or lunch when there is no pressing
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