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Should I Boot My Financial Adviser?

(By Tim Grajek For The Washington Post)
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By Kimberly Lankford
Kiplinger's Personal Finance
Sunday, January 18, 2009

QI'm a novice at investing, and I keep begging my financial adviser to give me specific advice during this economic downturn. But it seems as though, with all my research, I'm the one giving him advice. Am I expecting too much? Should I move on to another adviser? -- Sandy, Forney, Texas

AIt's essential that advisers be accessible to clients and explain their plans during times like these. Your adviser seems to be failing, and that's certainly grounds for dismissal. In fact, in a market like this one, in which virtually everyone is losing money, accessibility can be more important than a negative return.

There are other benchmarks to help you determine whether it's time to move on. Find out how your investments have performed compared with relevant indexes or other funds with similar strategies. You should generally focus on long-term results, but pay extra attention to how your investments have performed during the bear market. "No client of a financial planner or investment adviser should be doing as poorly as the markets," says Bob Veres, publisher of Inside Information, a newsletter for financial planners. "The best advisers also make sure their clients keep enough cash and ultra-safe bonds on hand so that nobody has to sell stocks for two years into the teeth of a bear market." Not having that kind of diversification, says Veres, "is a reliable sign of incompetence."

Your investments should also match your time frame and goals. Keep your long-term assets primarily in stocks. But short-term investments should be in bank accounts or money-market funds.

What adjustments is your adviser making during the current market? "You're looking for someone who sees opportunities to offset capital gains with losses, provides good diversification, recommends cautious additions to stocks and counsels against making wholesale changes until the market has regained its stability," Veres says.

Finally, consider how well the adviser prepared you for this situation. "A good adviser will have put a plan in place that expects horrible times in the markets," says Daniel Moisand, a certified financial planner in Melbourne, Fla.


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