Lon expressed his views that advisors and clients should agree on a comprehensive financial plan and an investment policy statement (IPS) that dictates how investment decisions should be made and how much communication will take place between the parties. Both parties should be held to this standard. If the advisor is making investment decisions that are outside the boundaries established by the investment policy statement, the client may be wise to find a different advisor. Similarly, if a client continually calls their advisors everyday voicing concern over their portfolio, and each day the advisor has to remind the client that the portfolio is currently positioned as the investment policy dictates, then the client may not be as vested in the relationship as is necessary.
Of course, it is the advisors job to provide guidance and comfort in challenging times, and occasional discussions with clients is to be expected. During these occasional discussions, the parties can reevaluate the rules governing the IPS and make adjustments if necessary. However, if the advisor receives phone calls from their advisor every day for an extended period of time, the advisor may examine the possibility of terminating the relationship.
The article was published in the NY Times "Your Money" section on February 25, 2009. http://www.nytimes.com/
About Lon
Lon Jefferies is an investment advisor representative with Net Worth Advisory Group, a fee-only financial planning firm. He is a member of the National Association of Personal Financial Planners (NAPFA) and a candidate for CFP™ certification. He possesses an MBA and bachelor's degrees in Finance and Marketing from the University of Utah. Learn more about Net Worth Advisory Group at www.networthadvice.com.
Lon Jefferies can be contacted at:
Net Worth Advisory Group
6975 Union Park Center, Suite 465
Midvale, UT 84047
(801) 566-0740
http://www.networthadvice.com
Lon's blog can be read at http://www.utahfinancialadvisor.blogspot.com
