I often meet people who are unhappy with their investments and retirement accounts. They’re frustrated their investments haven’t done anything for years. They’re distraught their bank CD only pays 2 percent annually. And they’re concerned they have not seen their financial adviser since they initially invested their money.

They’re upset … but they don’t do anything about it. They seem to believe the situation will somehow fix itself. What they don’t realize is if you do what you’ve always done, you’ll get what you’ve always got. Insanity is repeating the same poor actions over and over — and expecting a different outcome.

There is a much better way to invest, but it requires you to take action and be proactive. It all starts with selecting a quality financial adviser. Interview a prospective financial adviser just like you would a prospective employee. While hiring the wrong employee can cause unnecessary grief, hiring the wrong financial adviser can wreak havoc with your entire future.

Often, because people don’t know how to evaluate an adviser, they simply invest with the first person that impresses them. This is a mistake. The best salespeople are not necessarily the best advisers.
We provide educational resources on our Web site, www.paragonwealth.com, that outline seven steps to selecting a financial adviser. Three of them are non-negotiable. First, the adviser must be a fiduciary. Second, he or she should have 10 years of investment experience. And third, the adviser needs to show you a 10-year investment track record.

These may seem like stiff requirements, but they will significantly increase your odds of success.

Why is it important to find a fiduciary adviser? Fiduciary advisers have a legal obligation to put your interests ahead of their own. They are held to a much higher standard. Most people do not realize that all financial advisers are not fiduciaries. Surprisingly, it’s been estimated that only about 15 percent of advisers are fiduciaries. Generally speaking, most sales reps who receive a commission for selling financial products such as annuities, insurance and mutual funds are not fiduciaries. On the other hand, Registered Investment Advisers and their reps usually are fiduciaries.

Why should they have 10 years of experience? Because markets are difficult to navigate and are constantly changing. Ideally, your adviser should have experience investing in both good and bad markets. Experience is critical.

Why should you require them to show you their 10-year track record? If they don’t, then how do you know what they’ve done for prior clients? Talk is cheap. Legitimate advisers can show what they’ve done for clients over the years. Showing you the track record of a mutual fund, a hypothetical model, or anything else they have recently started selling does not count. They need to show you their own track record, which would be a composite of the results of their previous clients’ investments. Any adviser who refuses to show you their track record should be crossed off your list.

Make sure your adviser meets these three requirements. If you are not happy with your investment performance or your current adviser, do something about it. Poor investments will not fix themselves. To improve your situation, you must be proactive.

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