In my opinion, if you've accumulated more than $500,000 in investible assets and you're not interested in staying on top of that money on your own on an ongoing basis, you should consider utilizing the services of an Objective Financial Advisor- an advisor that doesn't sell any type of financial products, including insurance- an advisor that is bound by law to act in your best interest.

Over the past 110 years, investors have lived through several bear markets and lots of "market corrections". In fact, these 2 circumstances have been the "norm" for at least one-third of the time. But bad periods for stocks have always been followed by long and sometimes strong rising trends. Of course, you can never be sure when the rise will begin. 

In earlier blog posts, I've been strong in stating my opinion that independent advisory firms offer you a better value than large institutional brand name firms that you see advertised on television every day.

But what happens if your independent financial advisor suddenly passes away? That could pose a major problem. That's why I also recommend that you ask to see your advisor's written succession plan- their safeguard for you, in case an emergency arises. The succession plan will lay out the procedures and the names of the people who would handle your affairs in case of an accident or other unexpected event.

The importance of doing business with an "independent" financial advisor can't be overstated. Advisors that work for institutional brand name firms that you see advertised on television every few minutes have a "Master": the firm that writes their paycheck. Those advisors have an agenda: Satisfy the bottom line profits of the company. This could mean that the advisor is required to give advice that's not necessarily in your best interest.

Over the years, I've had hundreds of people call me needing help with long-term care planning. My advice has always been the same: LTC Planning is an integral component of financial planning. Because of that, a person should seek advice from an objective financial advisor about how to plan for long-term care. The response is usually: "I'm not sure if my advisor is objective." Or, "I don't have an advisor, how do I go about finding an Objective Financial Advisor?"

One particular caller was a widow. She was only 49 and had 3 young children. Her phone rang off the hook after she received a multi-million dollar settlement for her husband's accident at work. People calling themselves financial advisors had sold her all types of financial products, including large life insurance policies on her young children. I immediately referred her to an Objective Advisor, who helped her get out of the mess she was in, including cancelling that life insurance on her kids! 

I've gotten some negative comments from financial advisors who sell insurance. They've read my blogs and articles which adamantly advise people to steer away from financial advisors who sell insurance. Some advisors who sell insurance disagree with my recommendation and some are downright "nasty" with their rebuttals. 

Do most investment consultants have your best interests in mind? You might think so, especially if those advisors have the required credentials. You'd be wrong.

Most financial advisors are NOT required by law to have your best interests in mind, even some of those that have several letters behind their names.  In fact, most advisors, regardless of credentials, are required to act in the best interest of the party writing their paycheck: The insurance companies, mutual fund companies, or the large institutional investment firms that support them financially. Too often, these advisors recommend that you buy a financial product or use a certain investment strategy simply because it makes them and their company more money that the alternatives. 

A Merrill Lynch financial advisor told me recently that he's frequently having to reassure his clients that the parent company of Merrill Lynch, Bank of America, isn't headed for insolvency.

Bank stocks have been hurt badly during the recent downturn in the market, with Bank of America close to the top of the list of battered banks. Clients are wondering if their money is safe at the bank, and advisors working for Merrill Lynch definitely have their work cut out for them explaining why clients should keep their money with the firm when there seems to be safer places.

During the stock plunge and financial crisis of 2008 and 2009 did you notice that it was large brand name financial companies that had to be bailed out with taxpayer dollars? The large firms that had gotten so successful that they were "too big to fail."

You'll notice that independently owned financial advisory firms didn't run to the government looking for assistance. Why? Because they weren't invited to the party? No, because they knew from the beginning that they had to run their businesses like a business, or be put out of business.

With all the uncertainty in the economy and the volatile markets, investors are being scammed more than ever. Con artists exploit the fear of people who are unprepared and unsure of how to get advice from the right type of financial advisor. 

On August 25, 2011, I gave a presentation to over 150 single people who are members of the world's largest non-profit singles organization- The Society of Single Professionals. My topic was "How Millionaires Get There and Stay There". Based on the comments after the presentation, this is a topic that's of strong interest to affluent singles. 

The large majority of people who call themselves financial advisors are simply insurance agents or money managers. Of course, insurance planning and investing are important components of financial planning but when a so-called advisor places too much emphasis on one particular component of financial planning, you're not being properly served and it's dangerous to your financial health. 

A person's emotional motivations and the way they think about money are strongly connected. Understanding your "Investor Personality" can help you identify your best approach toward investing, and help you determine what type of financial advisor you should hire, if you hire one at all.

1. Thrill Seekers: These people are not so much investors as they are traders. They have a high level of interest in money and usually seek "hot performance". They like lots of detailed information about the new "hot tip" and find "playing the market" exciting. 
2. Guru Groupies: These people think money is confusing. They want the benefits that prudent investing brings but they seek a magic bullet and tend to rely on the opinions of friends, even if the friends have no expertise in money matters. They tend to chase and change gurus often.
3. Prudent Investors: These people are somewhat uninterested in money. They know that the protection of their capital is a priority but they find it  bothersome to learn about money details and keep up with all the changes. They're happy to pay a qualified advisor to take care of all the details of their money for them. 

A recent survey of 1,451 consumers reinforced the need for financial advisors to pay more attention to the "relationship" side of financial planning. The survey revealed that honesty and trustworthiness are the two most important attributes of an excellent financial advisor. Clients gave their personal advisors an average rating of 77% in these two areas. Surprisingly, only 19% of those surveyed thought "Delivering results" was the most important characteristic of an advisor.

One of the services provided by an Objective Financial Advisor is putting challenges and opportunities into perspective for you. When it comes to understanding the numbers surrounding all the debt our government is carrying, it's hard to get our arms around the scope of the problem. Just how much money are we talking about?

When it comes to financial planning and wealth management, getting objective advice is imperative. The best source for getting objective advice is to seek the services of an independent Registered Investment Advisor (RIA) Their businesses are independently owned and operated. They are affiliated with a custodian for trades and statements, so your money is held in a separate account in your name. You'll receive statements from the custodian. 

In my 22 years of serving the clients of Objective Financial Advisors with planning for long-term care, I've kept a diary of the ways people become financially independent and how they hold on to their money once they have it. For many years, there's been only 7 ways of becoming wealthy on my list and only 3 ways to stay there:

The 7 ways to become wealthy are:

1. Marry it.

2. Inherit it.

3. Get lucky. (win the lottery, etc.)

4. Do something illegal. (see drugs, embezzle, etc.)

5. Invest for it (Warren Buffett's approach)

6. Work for a company that allows you to contribute and be rewarded for how well the company does (equity, stock options, etc.)

7. Own your own business.

The 3 ways to keep wealth once it's obtained are:

1. Manage your health and your health care options.

2. Manage your relatonships with "tough love"- especially your relationships with your grown children.

3. Hire Objective Financial Advice (which is why we created the National Alliance of Objective Financial Advisors- to help consumers locate the most objective advisors in America)  

Strong emotions can heavily influence your financial decisions. With married couples, certain behaviors about money can influence not only whether or not the partners are happy, but also whether or not the marriage lasts.

Objective Financial Advisors are skilled at helping their clients avoid 4 common cognitive "errors" pertaining to money. We've discussed some of these in previous blog posts. Here's a summary of each:

All or nothing thinking: The habit of categorizing money situations in extremes. For example, something is either good or bad, or smart or dumb. Your finances are rarely that black and white.

Catastrophic thinking: The tendency to assume the worst case scenario. It's good to plan for the worst, but it's not smart to spend hours worrying about the worst.

Selective abstraction: Focusing on only one aspect of financial planning while ignoring all the other factors. This can be particularly common among people under age 50. Some young tend to focus too heavily on rates of return, while ignoring other areas of financial planning.

Over-generalization: Assuming that because something happened once, it will definitely happen again.

Some people have told us that the most valuable service offered by their Objective Financial Advisor is the help they get with sorting through their emotions pertaining to money.

A 73 year old Christian-Radio Show Host has been charged in a "Ponzi scheme"- indicted along with others in connection with stealing over $194 million from investors. Over $30 million of the money has already been spent for personal use. He admitted simply reading an on-air script that allowed him to pretend he was a financial expert.

How can investors protect themselves from the loss of their money due to theft and fraud? By making sure they never deposit money into accounts by making checks out to their financial advisor. And by making sure that all monies are held in separate accounts, in the investor's name, not in the advisor's name. These are two of the questions included in our "15 Must-Ask Questions" guide.

We hear from people regularly who ask us for a referral to an Objective Financial Advisor. After getting to know them, we sometimes learn that they're doing business with an advisor who's been a friend for many years. The friendship normally existed first, then the advisor (who is usually new to the advisory business) solicits the person for their business. Not surprisingly, it's almost always the advisor's desire to start a business relationship.

The person receiving the invitation doesn't want to jeopardize a friendship so they "go along". They justify the new business relationship because they hope a friend will manage their money more prudently than a stranger. Months later, they find out it's not true. They're unhappy with the relationship and feel taken for granted but they don't know how to end the business relationship(the friendship is normally well on its way to being over by this time).

If you have the need for a financial advisor, hire an advisor based on their objectivity, competence, and trustworthiness, NEVER based on a friendship. If a friend who is an advisor approaches you for your business, say something like "thanks for the offer but we're uncomfortable mixing business with friendship and our personal relationship is too important to jeopardize".

In future blogs, we'll offer advice to those who find themselves already in the uncomfortable position of doing business with a friend who's become their financial advisor.

Most people are confused when it comes to who they should trust with their financial future. Intuitively, most of us know that all financial advisors are not created equal. But the details of the differences between advisors can be confusing.

Two of the most important differences between Objective Advisors and Traditional Advisors have to do with their:

1. Philosophy concerning their relationship with you: Traditional Advisors usually rely heavily on "transactions", that is, selling products that pay them commissions. Objective Advisors have nothing to sell except advice so their emphasis is on building relationships based on the trust of the advice.

2. Compensation: Traditional Advisors are paid from several different sources, which could include (but may not be limited to) commissions from insurance companies or mutual fund companies; referral fees; bonuses for selling certain products or investments.

Objective Advisors are paid only by their client. The client knows exactly how much the fee is. There's no hidden agenda or conflict of interest for the advice the client receives because their advisor's job is to give objective advice. Period.

I'll elaborate in depth on these differences in future blog posts.

A Michigan financial advisor has just been charged with stealing over $1 million from her clients. She used the money for shopping sprees including buying a new car and funding her boyfriend's baseball team!

Candace D. Campbell of Canton, Michigan has been charged by the U.S. Attorney General's office of defrauding her clients by promising high rates of return, then using their money for personal gain.

How could these clients have made sure their money wasn't stolen? By making sure all their money was held in separate accounts, in their names only. And by making sure they received statements directly from the custodian of the money, NOT from the advisor. Two of the questions on our report "15 Must Ask Questions of a Financial Advisor" are related to making sure money isn't embezzled by an unscrupulous advisor. But some advisors will continue to steal their client's money until everyone in America learns the importance of making sure those 15 questions are answered properly.

It's no surprise that most of us are confused about the trustworthiness and objectivity of financial advisors. There's no rules or laws when it comes to calling yourself a "financial advisor". Your brother-in-law could hang out a shingle this afternoon that says "Financial Advisor". (I don't know about you, but shivers just went down my spine from the mere thought of that!)

So how do you know if your advisor is legally required to act in your best interest? By asking them this one question: "Are you held to a Fiduciary Standard?" Get the answer to that question in writing and signed. If they refuse to sign a statement saying they're held to a Fiduciary Standard, presume that they're not. That means they're held to a standard that requires them to act in the best interest of the company that writes their paycheck. The insurance company or brokerage firm is where their loyalties reside.

As confusing as it initially seems, knowing whether or not your advisor is legally required to act in your best interest boils down to getting a written answer to that one question. It's so important, I'll repeat it for emphasis: "Are you held to a Fiduciary Standard?" If so, continue the coversation to confirm the answers to the other 14 questions. If not, exit the conversation and the relationship as fast as possible.

A recent study found that some consumers would rather work with a financial advisor that earns commissions from insurance companies than have to pay the advisor fees that are transparent and easy to understand. This is because financial advice appears to be free if the client isn't having to directly pay the advisor.

But beware the high cost of "free"! Can anyone stay in business without earning money? And if the advisor's means of being paid is through selling you insurance and other financial products, what do you think they'll sell you? Right. And whether you need it or not.

The interesting thing about this study is that the more money a person earned or had accumulated, the less likely they were to work with an advisor who sells insurance. They wanted to pay the advisor fees, in exchange for complete objectivity. Does this prove that the more money a person has, the smarter they are? I'll let you draw your own conclusions.

These 2 terms are frequently thought of as meaning the same thing. In reality, there is a BIG difference between a Fee-Based financial advisor and a Fee-Only Financial Advisor.

A fee-only financial advisor can only receive compensation directly from you, for advice they provide regarding your financial situation.

A fee-based financial advisor can receive fees paid by you, in addition to commissions paid to them by a brokerage firm, mutual fund company, insurance company, or investment partnership.

Fee-only financial advisors have a fiduciary responsibility to act in your best interest.

Insist on a fee-only advisor who has passed the stringent Due Diligence Process of the National Alliance of Objective Financial Advisors (NAOFA)