Can You Trust Your Financial Advisor?

Here's how three families found financial advisors to help secure their wealth

For years, attorney Michael D. Pegues looked for A financial advisor he could trust — with little success. “The people I met might have asked me questions,” says Pegues, 40, “but they didn’t really listen. They all wanted to sell me life insurance right away without regard to the total retirement plan.”

Two years ago, Pegues, a Dallas resident, hooked up with Kevin E. Davis C.F.P., a financial planner with Consolidated Financial Services. “We both write columns for a Website, and we met at a dinner sponsored by the site,” Pegues recalls. “Kevin followed up a few times, asking how I was doing. I knew he had helped the parents of a colleague at my former law firm, so I decided to meet with him even though I was pretty skeptical about financial advisors in general.”

In this season of discontented investors, Pegues, an equity shareholder at Munsch, Hardt, Copf & Harr P.C. law firm, reports he is more than satisfied with Kevin’s advice. “I have had some losses, but they could have been a lot worse considering what’s been happening in the stock market,” he says. “Now, I don’t make a move without consulting Kevin.”

FINDING THE RIGHT ADVICE
Indeed, with the stock market far below its peak levels of early 2000, many investors are seeking the guidance of brokers, financial planners, and money managers. There have been, however, far too many reports of incompetence and corruption among such professionals. Many suspect that the internal sales quotas or high commissions they can earn at their clients’ expense motivate some brokers and planners. Nevertheless, there are honest financial advisors you can trust — if you take the time to find them.

For Pegues, the decision to work with Kevin stemmed from a refreshingly different approach. “Kevin asked me a lot about my family situation,” says Pegues, “and he asked to sit down with my wife, Sonya, too. The other advisors just wanted to talk with me because I’m now the only breadwinner, but Sonya has a finance degree and had a successful career before she decided to stay home with our children. She knows more about these matters, so I was glad that Kevin wanted to include her in our planning.”

After some initial fact-finding with the couple, “I determined that Michael and Sonya were relatively conservative investors who were more interested in meeting their goals than in trying for the highest possible returns,” says Kevin. “Therefore, I recommended a balanced portfolio with two-thirds in stocks and one-third in bonds. In the past two years, the bonds have helped to offset a down move in stocks.” The Pegues’ portfolio is down 7.6% for the year, as of July 31, while the Standard & Poor’s 500 index was off 21.05% over the same period.

Moreover, Kevin recommended that the couple’s stocks be mainly held in a mix of mutual funds. “With mutual funds,” he says, “you’re depending on the company’s research staff to help you pick good companies while avoiding trouble spots such as Enron. In particular, the American

Pages: 1 2 3 4 5 6
ACROSS THE WEB