Answers to questions about advice and choosing an advisor

Do you need financial advice? What should you look for in an advisor? Don Bennyhoff, CFA, of Vanguard Investment Strategy Group, and Kevin E. Miller, CFP®, of Vanguard Personal Advisor Services®, provide suggestions that can help you answer these questions.

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Gary Gamma: Why don’t we jump in and take our first question. We have Gail from Colorado who says, “What are the criteria for needing a financial advisor?”

Don Bennyhoff: I think the interesting word there is need. I’m not sure if people need an advisor, but I think a lot of people can benefit from one. A lot of people feel comfortable investing on their own and handling their own investments. Maybe they have the discipline, they have the awareness of how they would want to invest for their future goals and objectives. But a lot of people don’t really feel comfortable doing that or maybe not want to do it alone. Maybe they’re looking for a partner. So, I don’t think anyone really needs it, but I do think there are some signals that maybe having a consultation with an advisor could be beneficial. Sort of what I refer to as TWA could be a good starting, you know, a good starting point. You know, you feel like you don’t have the time to do it or just don’t want to take the time to do it.

Maybe you want to use the time that you have to do what you do best. Run your business, or see your patients, or enjoy retirement. Maybe it’s just, you know, an aspect where you’d rather do something other than worry about your finances and find a trusted advisor that can help you with that.

Gary Gamma: Right. So, thinking about that, Kevin, Karen from Hawaii said, “What questions should you ask potential advisors in order to make your selection?” So, if somebody does come to that conclusion that they want one, what are those questions?

Kevin Miller: Absolutely. I think you can look at it in a—From a couple of different areas so looking at the individual themselves. What’s their background? What sort of licenses or certifications do they hold? Asking about how are they compensated? You always want to make sure that sort of their interests are aligned with yours as the investor. Taking a look at methodology. So, exactly how is it that they manage the assets? Are they someone who trades a lot or doesn’t trade very frequently? You should be familiar with what to expect with that, and then, along with the products that they use. Are they going to use individual securities, like individual stocks? Do they use mutual funds, ETFs, or something else? So, I think, you know, getting a better sense of exactly if you decide to partner with them, what does that relationship look like over time?

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