>> You know folks I'm not immune. My portfolio has taken a real hit but thankfully I'm not going through this thing alone I have the guidance of my financial advisor Gorla laughter
>> I'm Jill Schlesinger Editor at Large
>> And I'm Ray Martin Special Contributor.
>> And in today's Reality Check how not to be in that situation.
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>> A lot of you have a broker or a financial advisor yourselves and I bet you could be getting a lot more out of those relationships. We have 5 ideas on just how to do that. So Ray I love your first point which is have a point and get to it. So let's get to it.
>> When you're calling your financial advisor I say either speaking to them writing to them remember the 3 C's: Be clear, concise and candid. I can't tell you the number of calls you get into and you just going all over the place here. Know what your objective is when you're gonna speak to your advisor and be very clear about your questions and very candid when you're telling about your situation because they're gonna need all the facts they need to know about you as well here.
>> And I also like the idea that we've been talking about this a lot at MoneyWatch what can your advisor really do for you and I think this is an important one because unless you know that you're not gonna get a lot out of your relationship. Is this an advisor who is just going to be investing for you? Is this an advisor who's going to be reviewing your estate tax situation and your personal income tax returns but talk to your advisor know what that is and then you know what your expectations should be. So be very clear what am I getting out of this relationship, very important. Now talk to me about this idea of determining a communication plan like frequency you know how often you're gonna meet or talk. How do you do that?
>> Yeah I think you need to set some ground rules here. How often should we speak? Will you be calling me? Will I be calling you? How often will be reviewing my portfolio? How often should we review a retirement projection? How often should we review education funding analysis for my kids? How about my tax returns when do you review that? Before I file? Should you look at it beforehand or if I change state documents and how often will we meet? Set up the rules of engagement here on that so you know what your expectations are and your financial advisor knows what they are and then stick to them so that then everybody can get into a service mode here and it'll work well for both of you.
>> I think some of the most difficult situations that arise between clients and advisors comes up around risk tolerance so the market's roaring up and all the sudden the client calls up and says why am I not more in the stock market? And then we as your advisor have to say oh remember Mr. Client when you said you didn't want risk how can we do a better job of getting both advisor and client on the same page around risk?
>> There is a lot of debate about here because it's very subjective. One Person could say I'm risky I keep all of my money in 1 bank you know what does that really mean are you a moderate investor or an aggressive investor? Those are just words. Your advisor should go through with you a multi multi page questionnaire talking about how long you've invested, what you're expectations are for returns, what you're tolerance are for real dollar losses. What investment do you completely want to avoid? Do you not want to ever touch limited partnerships? Are you familiar with exchange traded funds? Do you not want to be in specific health care stocks and then set all of this up into what's called an investment policy statement. A written document that you and your advisor say these are the rules of the game for how we'll invest and what we'll avoid. What we will do what our expectations are and that's a living breathing thing. That should be returned. You should review it but also you may have to update it every several years as well cause your risks and preferences will change.
>> The last point. How is your advisor being paid and
>> And how much they're being paid. Don't be afraid to ask them exactly that question. You want to know exactly what they're earning off of your account your relationship here. So then you know the value for the cost you're paying.
>> And that's your Reality Check.
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==== Transcribed by Automatic Sync Technologies ====
