Finance

• toomeyinvest
• Finance
• October 25, 2019

What Should You Expect From A Financial Adviser?

Just listen carefully to any advertisement from a typical investment company and you’re bound to feel a little warm and fuzzy.  And then, there’s the old warning, “its in the fine print”.   As you know, financial “people” are everywhere; from downtown to the bank.  Whether  you already work with an adviser or you’re thinking about it, here’s what you must inquire about  as you disclose your very private, personal information to any financial planner, broker or adviser.  The questions that follow should help you to set your expectations very high, because you and your family should settle for nothing less.

Will you have mostly proprietary investments?  In general terms, proprietary investments are those which are developed by the primary firm, itself.  For example, Fabulous Investments, Inc. is a financial firm.  The firm happens to own and sell a dozen mutual funds called Fabulous Investment Funds.  Those are called proprietary funds.  So, if you have or have been presented with investments that have the same or similar names as the investment firm, I would strongly suggest that you get another opinion.  Proprietary investments cause great concern in terms of objectivity…or the lack, thereof.   

Is your adviser a fiduciary?  I believe that the fiduciary duty is the gold standard in the financial industry.  A fiduciary must be objective and pursue the best strategies for your objectives and goals.  The guidance must be in your best interests and conflicts of interest, e.g., sources of compensation, must be disclosed.   So how do you know if your adviser is a fiduciary?….Just ask

Does your adviser work for you?  Consistent with being a fiduciary, its very important that your adviser works for you.  In my opinion, advisers employed by many big-brand institutions may not be able to be completely objective.  Frequently, production requirements and specific, packaged products might supersede the best guidance for you.  I have been working with the public for over 30 years—I have seen that all too often.

Does your adviser have recommended, respected credentials?  Now, it doesn’t mean that credentialed advisers are the absolute best, but its a good starting point.  If your adviser does have letters after their name, I would implore you to look up the acronym and investigate the criteria for credential qualifications.  You may be shocked to learn that some credentials can be used simply by joining an association, paying a fee and completing little or no educational curriculum.  In a nutshell, look for experience, education and continuing education which are required for most industry-respected credentials.

Is your adviser an experienced tax adviser\preparer?  Again, in my opinion, a thorough history of taxation and return preparation can be critical to precise guidance.  You see, a financial adviser should be much, much more than someone who facilitates investments.  Your financial world is chronically integrated with taxation.  How could you expect cutting-edge advice without the requisite experience in tax preparation?  And you may also be shocked to learn that frequently, in the fine print, the paperwork you have completed with your adviser may state something like, …we do not provide tax advice so please consult a tax adviser.  Think about that—a financial adviser who can’t provide critical tax advice? Isn’t a tax return the core of your financial picture?…you have to do one, right?  But still, it appears that your adviser may be prevented from, or be unqualified to provide detailed advice regarding the primary financial instrument in your financial world.

Finally, be certain to inquire about and understand how your adviser will be compensated.  Its a very important question that may help you understand the fiduciary vs. salesperson distinction.    And discuss your expectations for communications with an adviser.  Your financial world can be very dynamic and you should insist on guidance-on demand.

securities offered through Leigh Baldwin & Co., LLC

Member FINRA\SIPC

• toomeyinvest
• Finance
• July 21, 2016

Brexit: Is It Something to Worry About?

Brexit: Is It Something to Worry About ?

The term Brexit refers to the referendum vote in the UK to decide whether their country should remain as a member of the European Union (EU). The June 23rd vote was subject to constant political and media campaigns designed to “inform” voters. Once tabulated, the “leavers” were victorious and the British exit was confirmed. It appeared that the leavers were sending a strong message–they wanted to recapture sovereignty and had grown intolerant of the immigration policies within the EU…and they were willing to swallow the sour economic pill that would ensue while in pursuit of change.

As unsavory as it sounds, global investors literally gambled on the outcome. By gauging the market reactions to the results of the vote, it was clear that powerful investors took positions on the wrong side of the equation. Accordingly, the global stock and bond markets became very volatile. Domestic stock markets dropped over 5% while indices fell over 10% in some countries. The British currency, the pound sterling, fell to 30 year lows while the US Dollar strengthened and Treasury bonds became sanctuary for nervous investors. Consequently, the yield on US Treasuries had dropped to record lows (as capital floods into Treasuries, yields drop). Within days of the financial spasms, many stock markets bounced back as investors parsed the possible immediate and longer-term impacts.

So a few weeks after the Brexit vote, what does it all mean to you? First, it’s probable that direct, adverse consequences may befall Britain for quite a while; most immediately because of the deflated value of the pound sterling. Also, imports and travel will become more expensive. The effect on commerce between Britain and the EU has yet to be seen, though many speculate that Britain will suffer some level of economic hardship for years to come. Early rumors have also surfaced that EU banks may face another crisis.

As implied above, it seems that US citizens will bear only indirect, yet material, effects. For example, complete separation from the EU could take two years or longer. Along the way, we should fully expect problems and hiccups that the investment markets will consider unsettling. US businesses that export products abroad may struggle with earnings since the strong dollar makes those products more expensive. Reverberations from the export issue could spread into many layers of our economy and will likely spill over to the stock market causing greater, chronic volatility. US imports and travelling, especially to Britain, should become more affordable. Very important short-term is that mortgage and financing rates have dropped as the falling Treasury yields have pulled those down, too. Brexit may evolve to become synonymous with Dunkirk. And like Dunkirk, positive catalysts for the future, while unrecognizable at the time, were nonetheless forged.

Toomey Investment Management a boutique wealth advisor firm partnering with mid to high net worth individuals, families and businesses.

• toomeyinvest
• Finance
• February 4, 2015

I Am a Fiduciary

So I looked up the definition of “fiduciary” online. Even though the interpretations of a fiduciary can vary amongst different professional engagements, it is fair to state that a fiduciary must legally put your interests before their own. The “fiduciary standard” is extremely important in the world of financial and legal activities, not the least of which includes those with investment brokers, financial planners or similar titles.

You may be surprised to learn that your own financial representative MAY NOT BE a fiduciary….Not kidding!
So you may be working with a person or firm that has no legal requirement to put your needs and objectives first. Let’s compare that to a different relationship. What if you went to buy a new, big-screen television. And let’s say that one store only employed fiduciary salespeople who were legally required to provide disclosures and all the pro’s and con’s to help you make the best decisions. Contrarily, the other competing store didn’t require a fiduciary duty…which store are you going to? Now I understand that a financial relationship is not identical to buying a TV, but I do stress the expectation of absolute trust and objectivity one must have in financial engagements…that person who always acts as if they were doing things for themselves. And over the past decade or so, many industry lobbying firms have rigorously fought to prevent the imposition of a uniform fiduciary standard….I’ll let you ponder over that one.

So, maybe a good question to ask a current or potential financial adviser is “are YOU a fiduciary?”