Can You Trust Your Financial Advisor?

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

Funds group has a good record in this area.”

KNOW WHEN TO FOLD ‘EM
On the other hand, some investors will prefer to invest in individual stocks rather than funds. “Again,” says Kevin, “diversification is vital. You’re less exposed to problems at any one company if it makes up a small portion of your portfolio. Even so, you should read a company’s annual report and do other research before you invest. After you invest, be prepared to sell the stock if it drops by more than 10%. You might not like a 10% loss, but that beats taking a much larger loss if bad news about the company continues.”

Taking a big loss on a stock is bad enough. When that stock makes up most of your portfolio, such a sell-off can be tragic. “About 80% of my portfolio was held in my company’s stock in 2000,” recalls Hillis Davis, 39, a manager at United Technologies Carrier Corp. in Atlanta. “I feel good about my company’s future, but a lot of Enron employees felt good about their company, too. When Enron came crashing down, I realized the risk of having too much of your net worth in one stock.”

By the time Enron made the headlines, Hillis had already reduced his dependence on his company’s stock. “In the spring of 2001, we had begun working with a financial planner, Vicki Brackens, after a friend referred her,” he says. “One of the first things she did was get me to lighten up on my company stock and reinvest in a diversified portfolio.”

Hillis admits that he had some initial doubts about working with a financial planner until he discovered Brackens, who represents MetLife Securities in Syracuse, New York. “I was afraid she would just try to sell me life insurance,” he says, “but I soon found out that that wasn’t the case. She asked many questions about our wants and needs and came up with a complete financial plan that ranged from investments to debt reduction.”

The Davis’ plan includes more life insurance, too. “We really needed more,” says Hillis’ wife, Suzanne, 39, a communications manager at United Technologies, “especially since last year, when I had triplets, bringing our total children to four. But Vicki has also urged us to create 529 college plans for our children, and helped us coordinate our 401(k) investments so we have a broad asset mix without duplication.” The Davis’ portfolio is down about 10% for the year that they’ve been working with Brackens, a performance that beats the returns of many other investors.

MAKING YOUR DECISION
As you choose among financial advisors, it’s important to remember that a big part of what you are paying for is the treatment you receive from your advisor. For example, Shawn Washington, 39, a CPA in Riverside, California, searched for a planner who had great attention to detail and a personalized approach. He also used the most proven method to find a trustworthy advisor — a glowing referral from a satisfied client.

He recalls, “When I worked for

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