By: Glenn Wessel, CFA, CPA, CFP®closeAuthor: Glenn Wessel, CFA, CPA, CFP® Name: Glenn Wessel
Member: Member Paladin
Quality Rating:
Email: gwessel@wesselinvestment.com
Site: http://www.wesselinvestment.com
About: After having graduated with a degree in Economics, I quickly realized that I was ill-prepared for the real business world. I read Venita VanCaspel's best-selling self-help book "The Power of Money Dynamics" and discovered that the financial advice put forth by insurers and other large institutions often ran contrary to the best interests of consumers. Emmulating the author, I earned the Certified Finanial Planner(TM) licensel. As useful as that program was, however, I was disappointed to discover that investment theory comprised a relatively small portion of this two-year program. Wanting to specialize in the investment arena, I undertook the rigorous Chartered Financial Analyst(TM) program where the topic of investments is studied in one fashion or another over the course of three years. I have worked in finance for some 20 years (even overseeing an insolvent S&L for a year in a previous banking debacle) and have taught undergraduate finance courses for Florida Atlantic University. I established an investment advisory practice in 2003 and have since obtained a CPA license to help assure that any advice I render is well coordinated with the tax code. On a personal front, I play guitar (blues) and am in the process of building a 600 horsepower musclecar (a '66 Fairlane). I enjoy riding fast sportbikes and have been a lifelong sprinter.See Authors Posts (3) | June 19, 2009

Form ADV is a filing registered investment advisors (RIAs) must file with the various states in which they do business or, if the firm manages enough money, the Securities Exchange Commission. As such, Form ADV is the form advisors must use to disclose a variety of important information. If your advisor does not have a Form ADV to offer you, take it as a sign that he or she is either a ?registered representative? of a brokerage firm (that is, a broker, an account executive, or some other type of salesperson) or an agent for an insurance company. In these cases, your advisor legally represents your counterparty?s interests – not yours!

If your advisor does have a Form ADV to provide to you, he or she will most likely provide you only with “Part II” of that form since only that part of this form is required to be made available to you. Nonetheless, ask for “Part I” of Form ADV and take a quick glance at the following 5 items:

1) Item 5E(5) ? Commissions
Is your advisory firm compensated through commissions? If so, its objectivity may be impaired and item 5E(5) will be checked.

2) Item 6B(3) ? Other Business Activities
Is your advisory firm structured to sell certain financial products or other services? If so, it may have an incentive to sell those products or services to you regardless of your particular needs. Its response to item 6B(3) will then be ?Yes.?

3) Item 7A – Financial Industry Affiliations
Is your advisory firm really independent? While it may advertise that it is, it may really be an independently operated branch of an insurer, brokerage firm, or of some other entity. If your advisor is controlled by or affiliated with some other entity, its interests may run counter to yours and it will have to disclose any potential conflicts in item 7A.

4) Item 8E ? Interest in Client Transactions
Is your advisory firm receiving a discount on investment research or other services from third-party vendors at your expense? If so, it is taking advantage of one or more so-called ?soft-dollar? arrangements which must be disclosed by responding ?Yes? to item 8E.

5) Item 8F ? Compensation for Client Referrals
Were you referred to your advisory firm by someone else? If so, it is possible that your advisory firm compensated that other person for the referral which means that you may have been introduced to your advisor for reasons that have little to do with your best interest. It also means that you might be paying more for services than you otherwise might. If your advisor pays for referrals, its response to item 8F will then be ?Yes.?

When interviewing an advisor, pose all these question verbally ? and then ask for Form ADV. If the firm?s written responses to these items don?t match its verbal representations, walk away.

If you’re considering hiring an advisor, ask for both parts of the firms “Form ADpart one and part

By: Glenn Wessel, CFA, CPA, CFP®closeAuthor: Glenn Wessel, CFA, CPA, CFP® Name: Glenn Wessel
Member: Member Paladin
Quality Rating:
Email: gwessel@wesselinvestment.com
Site: http://www.wesselinvestment.com
About: After having graduated with a degree in Economics, I quickly realized that I was ill-prepared for the real business world. I read Venita VanCaspel's best-selling self-help book "The Power of Money Dynamics" and discovered that the financial advice put forth by insurers and other large institutions often ran contrary to the best interests of consumers. Emmulating the author, I earned the Certified Finanial Planner(TM) licensel. As useful as that program was, however, I was disappointed to discover that investment theory comprised a relatively small portion of this two-year program. Wanting to specialize in the investment arena, I undertook the rigorous Chartered Financial Analyst(TM) program where the topic of investments is studied in one fashion or another over the course of three years. I have worked in finance for some 20 years (even overseeing an insolvent S&L for a year in a previous banking debacle) and have taught undergraduate finance courses for Florida Atlantic University. I established an investment advisory practice in 2003 and have since obtained a CPA license to help assure that any advice I render is well coordinated with the tax code. On a personal front, I play guitar (blues) and am in the process of building a 600 horsepower musclecar (a '66 Fairlane). I enjoy riding fast sportbikes and have been a lifelong sprinter.See Authors Posts (3) | May 28, 2009

Regulators consider many of the titles that are commonly used within the financial advisory community as being of a generic nature. That is, they are non-specific enough that they, for the most part, escape regulation. "Financial Planner" and "Financial Advisor" are two notable examples of a generic title. Because anyone may use these titles, they convey little useful information to consumers. The descriptor "Vice President" may be a meaningful adjective within the confines of various entities…or it may not. In actuality, some organizations are swollen with VPs whose responsibilities are pretty watered down. In contrast, the term “partner” tends to carry some weight – and for good reason. When you walk into a professional services firm (e.g., a law or accountancy firm) and meet with a partner, that person is likely to have provided years of valuable service to that firm . The term partner is also a legal term that suggests an ownership interest in the firm. However, what if an advisory firm that whose advisors were regular employees automatically received business cards that say partner? Clients would be duped, but regulators may not notice. This practice is unethical if not illegal, I’ve seen advisory firms resort to this tactic in an effort to give its advisors a marketing edge.

By: Glenn Wessel, CFA, CPA, CFP®closeAuthor: Glenn Wessel, CFA, CPA, CFP® Name: Glenn Wessel
Member: Member Paladin
Quality Rating:
Email: gwessel@wesselinvestment.com
Site: http://www.wesselinvestment.com
About: After having graduated with a degree in Economics, I quickly realized that I was ill-prepared for the real business world. I read Venita VanCaspel's best-selling self-help book "The Power of Money Dynamics" and discovered that the financial advice put forth by insurers and other large institutions often ran contrary to the best interests of consumers. Emmulating the author, I earned the Certified Finanial Planner(TM) licensel. As useful as that program was, however, I was disappointed to discover that investment theory comprised a relatively small portion of this two-year program. Wanting to specialize in the investment arena, I undertook the rigorous Chartered Financial Analyst(TM) program where the topic of investments is studied in one fashion or another over the course of three years. I have worked in finance for some 20 years (even overseeing an insolvent S&L for a year in a previous banking debacle) and have taught undergraduate finance courses for Florida Atlantic University. I established an investment advisory practice in 2003 and have since obtained a CPA license to help assure that any advice I render is well coordinated with the tax code. On a personal front, I play guitar (blues) and am in the process of building a 600 horsepower musclecar (a '66 Fairlane). I enjoy riding fast sportbikes and have been a lifelong sprinter.See Authors Posts (3) | May 19, 2009

To win clients, advisors must establish credibility. In lieu of experience, advanced degrees, professional credentials, or a proven track record, my seat-of-the-pants experience suggests to me that less scrupulous advisors are sometimes prone to raise the importance with which they are perceived by marketing themselves using their full names and suffixes.

For those of you who remember the sitcom Gilligan’s Island, Thurston J. Howell "the Third" comes to mind as the archetypical example of empty self importance. Unless an advisor is genuinely concerned that he or she might actually be mistaken for someone with a similar name, any advisor who uses his or her full name may be compensating for a lack of substance the same way overweight people dress in black to compensate for too much of it.